Outsourcing

Outsourcing bookkeeping can be a good idea if your business wants accurate financial records without taking up internal time. When you outsource bookkeeping you are asking a specialist to record transactions, reconcile accounts and keep things in line with accounting standards. This can help reduce errors and create clearer reporting for year end or management reviews.

It is also useful where you have seasonal activity or rapid growth because the level of support can usually be adjusted. Many businesses choose this route to create separation of duties and improve controls. Whether it is right for you will depend on how complex your records are, how often you need information and whether you already have accounting software in place.

Whether you should outsource your accounting depends on the size of your organisation, the level of reporting you require and how confident you are that your current processes meet compliance requirements. Outsourcing accounting means an external team can prepare management accounts, support VAT or other indirect taxes and keep ledgers tidy for year end. This can free internal staff to focus on operations or business development. It can also introduce more structure around deadlines, approvals and documentation.

Some businesses prefer outsourcing because it gives access to qualified accountants without the cost of recruiting and training in house. If your business is growing, works in more than one location or needs regular board level information then outsourcing accounting can be a practical way to standardise processes.

How much it costs to outsource accounting will usually be based on scope. Accountants will look at transaction volumes, number of bank accounts, payroll links, VAT or other indirect tax needs and how often you want management information.

A simple monthly bookkeeping and accounts package could cost less than a fully managed finance function that includes reporting to stakeholders. Costs may also vary if you need support with software, process improvements or catch up work. Many firms use fixed monthly fees so that businesses can plan cash flow. Where work is more complex, time spent pricing can be used so that the service matches the level of technical input required. Asking for a proposal that breaks out the elements of accounting will show you where the main costs sit.

When you ask how accounting outsourcing works you are really asking how an external accountant can take over parts of your finance process in a controlled way.

The usual setup is that the accountant agrees to specific tasks with you, such as processing transactions, reconciling accounts and preparing regular reports. You provide secure access to your accounting system or documents, and the accountant completes the work to an agreed timetable. Information is shared through approved portals or similar tools so that records remain organised for audit and tax. Service levels, response times and review points are set out at the start so that everyone understands what will be delivered. Over time the arrangement can be expanded if your business grows or your reporting needs change. This keeps the outsourced accounting structured, traceable and aligned with compliance.

These are some simple steps for how to outsource your accounting services:

• Start by confirming which parts of your finance function you want to outsource, for example bookkeeping, VAT, supplier payments or management accounts.

• Choose an outsourcing provider with qualified accountants, proven controls and secure systems so that your data is handled properly.

• Tell them your reporting dates, approval steps and any sector specific compliance so they can mirror this in their service.

• Agree a documented workflow for sharing invoices, bank statements and payroll information so there is a complete audit trail.

• Complete a structured handover so opening balances and supplier information are correct before they begin processing.