As more Canadian companies recognize the value of outsourcing non-core functions so they can focus on their own core competencies, virtual accounting is coming to the fore. New developments in online communication and data storage have made the transition to paperless, entirely online bookkeeping and accounting both simple and cost-effective for businesses in all industries.
Leaders are freed up to lead.
Many small business owners are overwhelmed by the demands on their time. Bookkeeping is a vitally important business task. Owners and senior managers are pulled in a hundred different directions each day.
If you find yourself spending valuable time dealing with data entry and logging transactions, rather than focusing on your core functions of improving your product offering, marketing and selling your product or service, and training and motivating your employees, you may stand to benefit from immediately outsourcing some or all of your accounting and bookkeeping functions.
Outsourcing wins over carrying employees
Most small businesses cannot justify a full-time employee devoted entirely to bookkeeping and accounting. For many small and medium-sized enterprises, once their basic systems are set up correctly, there simply aren’t enough transactions. There’s a rush during tax prep season, but other than that, many full-time bookkeepers wind up underutilized.
Even worse, many times, business owners delegate bookkeeping tasks to an administrative employee with little or no training in bookkeeping or accounting.
This can lead to major problems in tax compliance, and inaccurate books, which can severely affect the value of a small business. This, in turn, can make it more difficult for the company to access credit, or affect the value of the company in a sale.
Additionally, employees can be very expensive to companies. Carrying a full-time bookkeeping employee on the books is much costlier than their wages alone: Employers must also carry the cost of holiday pay, insurance, retirement benefits, fringe benefits and perks, office space and technology. Additionally, employers have to bear substantial risk of liability, just from having another employee on the roster.
All told, these additional expenditures over and above direct wages typically add 25 percent or more to the direct wage costs of having an employee.
If an employee leaves, the business owner not only loses institutional memory – he or she must also bear the cost of advertising, screening, interviewing and training the replacement.
Increasingly, businesses are not replacing departing bookkeeping workers. Instead, they’re increasingly putting someone more productive in that vacated chair, while they bring on a virtual accounting / bookkeeping firm that can handle the old bookkeeper’s tasks much more efficiently.
With a virtual accounting firm, you pay only for the services and hours you use. This is a big improvement over underutilized bookkeepers continuing to draw a full-time paycheck.
As your business grows, you’ll do more transactions. It’s easy and cost-efficient to scale up, and even add a second bookkeeper if needed.
With outside bookkeeping and accounting firms, the employer is relieved from the training burden. The responsibility for training new bookkeepers lies with the bookkeeping firm, not with the client.
So it’s very easy for companies to scale up or down quickly as their situation changes.
With legacy methods, including keeping a full-time employee on the books, you may need to keep paying that employee even when business is slow and transactions come to a near standstill. The employee becomes part of your fixed costs. But if these employees are underutilized because of a lack of transactions, they can become a burden rather than a resource.
How to Learn More
To learn more about how outsourcing your bookkeeping and accounting functions can improve your efficiency and profitability, contact us today for a no-obligation consultation.