Outsourcing Accounts Payable: 5 Things You Should Know Beforehand
Outsourcing is a terrific way to manage your expenses while providing your company with much-needed expertise that is both reliable and up to speed on the latest software, regulations and best practices.
The outsourcing option is excellent for young and emerging businesses that don’t have the staff resources. It’s hard for a lean organization to effectively develop and manage the accounting function; particularly when a misfire with a task like payables can impact your bottom line and disrupt/delay cash flow. From coding errors to botched payroll, there is no room for amateurs when it comes to your small business’s accounting needs. After all, who needs dunning notices from creditors, or worse, late payment notices from the IRS.
If you are thinking about hiring a company to handle accounts payable, or even payroll and other bookkeeping matters, it is important to note that all outsourced service providers are not created equal. From experience to capabilities and pricing, outsourcing providers vary wildly. With that in mind, before you hit the search engines to shop for an outsourced accounts payable service, here are five important matters to consider before you pull the hiring trigger:
Every company should have some sort of disaster plan. Fires, power outages, even floods can destroy a physical business in minutes. Without a plan—and proper system back-ups—your company is dangerously exposed. Outsourcing is an excellent solution for keeping operations running smoothly when disruptions threaten the flow of things. That said, will the outsourced accounting service you select deliver their solution on a secure platform? Will your data be safe/backed up in the cloud? How difficult will it be to retrieve information if you need to make a change?
One of the key benefits to an outsourced solution is that your financial information is not locked in the mind of an employee that can leave on a moment’s notice. Will your outsourced solution have back-up staff and common procedures in the event of a staff change? Do they follow common protocols to ensure your bills get paid, checks prepared and accounts updated without disruption?
#3 Service History
Since your outsourcing selection will be a new relationship, there is really no guarantee how well they do their job until you experience their service first-hand. For this reason, it may be valuable to check some references. Are there clients that you can speak with about the timeliness, accuracy, and attitude they provide to others? While no one offers a potential client a bad reference to speak with, there is still value in speaking to people who depend on this outsource to learn how they do their job.
It may seem obvious, but there are many companies on the web that offer outsourced bookkeeping, but the staff they hire are less than knowledgeable when it comes to accounting, or even math, for that matter. It is always worthwhile to ask what other kinds of services the company can provide in order to learn the depth and breadth of the expertise available in their company. Can they help you rebuild your chart of accounts if it is not giving you the reporting you need? Can they help you run reports that add value to your management? If bookkeeping is all they do, the service might not be right for you, particularly if you are concerned with regard to the tax-impact of how certain accounting is performed. In addition, you more than likely will have questions down the line that require some accounting muscle to resolve.
#5 Other Services
As we mentioned earlier, your outsourced accounting service is a small, but important piece of your financial puzzle. You can really leverage the value of a smart outsourcing firm if they offer other services, such as reporting, tax planning, and financial planning to offer if and when you need them.
Armed with the information above, your selection process should be a successful one. However, if you still feel unsure, feel free to contact our office for a no-obligation conversation about your needs, budget, and timeline. We welcome your thoughts.