When You Should Outsource Your Accounting

Are you looking to simplify your small business and make it easier to manage so you can spend time on the things that really matter? Or do you have large goals for your business, but you aren’t quite sure where to start? Outsourcing your accounting department can help you achieve all the above and more! If you aren’t sold on outsourcing your accounting yet, keep on reading to find out everything you need to know.

What is Outsourcing?

The first question you may have is, what is outsourcing? Outsourcing is when a business decides to have an outside party provide a service instead of doing it themselves. Businesses can outsource various departments and any department or task can be outsourced. The Small Business Administration (SBA) proposes outsourcing departments such as: Accounting, Marketing, Sales, IT Management, Administrative Tasks, Customer Service, Manufacturing, Shipping, Research, and Human Resources. While it isn’t likely for a business to outsource every department, they should look at each one and to determine potential cost savings. Not sure how to determine which departments are costing you too much? That might be your sign to outsource your finance and/or accounting department!

What is Outsourced Accounting?

You might be thinking, what is outsourced accounting and what does it do? Outsourced accounting is when you hire another company, like TGG, to perform accounting tasks and responsibilities. Those responsibilities may look different for each client so let’s look at a few examples.

The TGG Way™

Most of TGG’s clients fall under the “Full TGG Way Package”, which is where a team of four TGG accountants handle all of the day-to-day tasks and produce monthly financial statements. But, that is the tip of the iceberg for what the TGG teams actually do. What are the teams actually doing then?

The CFO (Chief Financial Officer) helps the client reach their goals. The CFO does this by undertaking the administrative, financial, and risk management operations as well as developing financial and operational strategies to maintain or improve your business. They act as a coach in guiding the business owner to make sound financial decisions.

The Controller produces accurate financial statements and budgets designed to mitigate risk. They tell the story of the financials with charts and graphs as well.

The Accounting Manager handles transaction processing according to proper financial accounting standards. The Accounting Manager teaches and mentors both TGG’s staff and the client’s staff on proper controls, specific systems, and anything else needed. They are responsible for 100% accurate and timely financial statements.

The Staff Accountant handles the day-to-day accounting tasks that serve as the foundation for producing accurate financial statements.

While the full TGG Way package is the best way to go (in our opinion), there are other options for you to choose from.

What if I already have a Bookkeeper, Staff Accountant, Controller, or CFO?

While Bookkeepers are great for day-to-day tasks, they may not have the expertise and experience to grow your business. Even if you have an Accountant or two (at any level), they are most likely struggling to handle all aspects of the accounting department.

But, that does not mean you have to fire your bookkeeper or any of your accountants. The TGG team will work alongside your current team to help you achieve your goals and have accurate financial data.

What are the Advantages of Outsourced Accounting?

Now that you know what outsourced accounting is, let’s look at all the advantages of outsourcing your accounting department. Some of the advantages include control, cost savings, and expertise.

Control

You may be thinking that if you outsource your accounting department you will lose control over the financial decision-making. That is not the case. On the flip side, you may want to be less involved in the accounting department or your business in general. Outsourcing can give you either one of those, all you have to do is let the team know what your goals are and boundaries for control.

How do you, the business owner, remain in control if your accounting department is run outside of the company? Communication is key! You will be able to communicate with your team as little or as much as you feel necessary. Your team will also provide weekly email updates to keep you in the loop of what happened during the week, what is planned for the next week, and any non-urgent questions they may have. TGG’s accountants truly care about you and your business and want it to succeed, so reaching out when you have a question is welcomed.

On the other hand, if you want to be less involved, that is fine as well. You can rest easy and know that your team will take care of everything and will reach out if there is an emergency.

Cost

Outsourcing your accounting department is cost effective. TGG’s team of accountants are typically more cost effective than having an in-house accounting team. On top of that, TGG accountants actively look for savings throughout the business to save you money. You may be overspending and not even know it, so our accountants can take a deep dive and find those cost savings for you.

Expertise

TGG has over 50 accountants with a wide and diverse range of experience. While you will have a team of four, that does not mean you only have access to their expertise. All of TGG’s accountants communicate with each other and if there is something they do not know or have little experience with, they will reach out to their colleagues and work to find the best solution for your company. If there happens to be something TGG’s accountants don’t know, they will research the topic or issue and get back to you as soon as possible. TGG’s accountants stay on top of current trends and any new laws that impact accounting. There are also daily and monthly trainings held internally to make sure each accountant has the knowledge necessary for their position.

Protection Against Fraud

Fraud is something that can happen to any business, no matter the size. According to the 2020 Report to the Nations, the median loss for companies with less than 100 employees was $150,000, with asset misappropriation making up 86% of the cases. Proper internal controls can help prevent asset misappropriation by having a layer of checks and balances at every level. Small businesses often don’t have the resources for a full accounting team, which can lead to a lack of internal control. The TGG Way is to have four accountants to a team and have reviews at each level. This significantly decreases the opportunities for fraud to occur.

Availability

If you have one or two accountants and one (or both) takes time off, you will likely be left with important tasks either not being done altogether or getting done late. Neither of those options is ideal. That is where outsourcing your accounting can save the day. Since there are four to a team, there will always be someone to cover other tasks if an employee is out sick or taking time off. Also, if a team member is out and another accountant is urgently needed on the team, another accountant can easily step in and help.

When Should You Outsource Your Accounting?

We have gone over what outsourced accounting is and the many advantages to it, now it is time to figure out when you should outsource your accounting. The short answer is anytime is a good time. Let’s take a deep dive into why you can outsource your accounting no matter where your business is in its life cycle.

New Business Startups

If you are a startup, right now is the time to outsource your accounting. Even if your business is doing well, now is still the time. You shouldn’t wait until a finance or accounting issue arises to hire help. TGG has worked with over 500 clients in the last 15 years, so you can trust TGG to guide you in the right direction! Matt Garrett, the Founder and CEO of TGG, saw a gap in the market and built TGG from the ground up, so he knows how hard it can be as an entrepreneur trying to make your way in the world. There are several problems startups face and TGG can provide outsourced accounting solutions to many of them.

The number one challenge startups face is money. While TGG can’t directly make cash flood in, your team of accountants can definitely help. For example, if you need a loan from a bank or have an investor lined up, they will want to review your financial statements. If you have poorly executed financial statements (or none at all), TGG can jump in and get them ready for anything that comes your way. TGG can also provide Cash Flow Forecasting. Cash Flow Forecasting gives companies insight into when cash is coming in and leaving the business, it can also predict if cash will run out. Knowing when cash is likely to run out is valuable information because it will give you time to get a loan or find an investor.

Other challenges startups face is planning, scaling the business, and staying within their comfort zone (4). Many outsourced accounting companies are only capable of forecasting cash flow, but it is built into the TGG Way to plan, scale businesses, and determine when it is safe to move out of the comfort zone.

You Struggle with Planning, Scaling, or are “Stuck” in Your Comfort Zone

Planning can be difficult, especially with the constant uncertainty that life brings, but it is a key component in scaling a business and breaking free from your comfort zone. Business owners at any point can struggle planning and preparing for the future. Lack of planning might be caused by wanting to stay within your comfort zone, and you might be successful there, but if a business does not continue to grow it may deteriorate. Or maybe you are already far outside your comfort zone and want to scale your business, but you don’t know where to go from where you are. Accounting can positively impact a business as a whole if done correctly. The opposite is true as well, if accounting is done poorly it will eventually catch up with the business and cause major problems.

TGG’s CFOs can help with planning for the future, scaling your business, and let you know when it is ok to take risks. While the CFO is focused on helping you plan for not only your business, but for your life, the other team members are ensuring accurate accounting.

Cash Flow is Low

If cash is running low, making a hiring decision is likely the last thing on your mind. However, outsourcing is typically more cost effective and is much easier than recruiting a new employee.

A TGG team can come in and tell you when you will run out of money and be able to make recommendations so that doesn’t happen. Recommendations that work for one company may not work for another, so that is where our accountants’ extensive knowledge and experience with various companies and industries comes in. Cash flow issues can be stressful and complicated, which are just two reasons to outsource your accounting to experts that can alleviate the stress and break it down so you can actually understand what is happening.

You Just Don’t Understand Accounting

If you don’t understand accounting and can’t seem to wrap your head around all the numbers that are associated with it, you are not alone. Accounting can be confusing, and as a business owner you may want to understand what the financial statements are telling you. There is a mountain of information you can find online about accounting but sorting through it can be overwhelming and it still may not make any sense. TGG can help, our accountants are skilled at telling the story of what is happening beneath the surface of your business. The team CFO will tell the story of your financials in a detailed, yet simple, way so you can understand and build your accounting knowledge at the same time.

You Need to Hire an Accountant

Hiring any employee can be stressful and it usually takes a long time to find the right fit. Hiring an accountant may come with extra anxiety as well because they will be handling your business’s finances. There is so much to consider when looking to hire an employee, such as placing an ad, sorting through resumés, scheduling interviews, and determining if candidates would be a good fit with the company. Outsourcing your accounting needs would eliminate that lengthy process. While outsourcing your accounting with TGG (or any company) is not instant, it is easier and will save you time and resources you would otherwise be using for recruiting. If you are considering hiring an internal accounting team, give TGG a call beforehand and see if outsourced accounting would be a good fit for your business.

Where is Outsourced Accounting Done?

Outsourced accounting can be done anywhere. TGG is a 100% fully remote company so our accountants can live and work anywhere. We are now spread out from California to Florida, and so many states in between! That means we can service clients wherever they are located.

Does the thought of a fully remote accounting department worry you? Outsourcing through TGG is just as safe as, if not even more safe than, having a team of accountants in the same building as you. We use a secure cloud-based system on every laptop to ensure information is safe. TGG has client safety in mind when it comes to sensitive information and we ensure each team member is up to date on best practices.

If you are still wondering why you should outsource your accounting department, and if the cost savings alone didn’t pique your interest, just remember that TGG will work with where your business is currently and help you get to where you envision it. Are you still unsure about outsourcing your accounting department?