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February 11, 2025Is your business struggling to keep up with accounting demands? Here are 5 clear signs it might be time to outsource your accounting:
- Delayed Financial Processes: Missed deadlines, late payments, and slow monthly closes can disrupt operations.
- Company Growth Exceeds Staff Capacity: Rapid growth leads to transaction backlogs and compliance challenges.
- High Costs and Low Performance: In-house teams often cost more and deliver less accuracy and speed.
- Outdated Methods Create Risk: Manual processes and old systems increase compliance risks and errors.
- Difficulty Finding Qualified Staff: Accounting talent shortages delay reporting and raise error rates.
Outsourcing can streamline your accounting, reduce costs, and improve accuracy with advanced tools and expert support. If these challenges sound familiar, it may be time to consider outsourcing.
Sign 1: Delayed Financial Processes
Missing financial deadlines can spell trouble for any business. In fact, 35% of companies report delayed monthly closes as their biggest accounting headache . On top of that, processing receivables late can push working capital shortages up by 42% .
Why Delays Are a Big Deal
When financial processes lag, the ripple effects can disrupt operations in multiple ways:
- Strategic Slowdowns: Companies take 23% longer to react to market changes , which clashes with the fast-paced demands of today’s financial landscape.
- Compliance Risks: Late financial reporting increases the likelihood of audit failures by 28% .
- Vendor Issues: Delayed payments can strain supplier relationships and jeopardize early payment discounts .
The Role of Outsourcing in Fixing Delays
These delays can hurt a company’s ability to compete. That’s where outsourced accounting teams come in, using advanced tools and expertise to speed things up significantly.
Here’s what they bring to the table:
- Round-the-Clock Processing: Global teams operating across time zones keep workflows moving nonstop .
- Cloud ERP Systems: These systems help businesses close monthly cycles 63% faster , cut invoice processing time by 72% , and resolve errors 68% faster using AI .
- Robotic Process Automation (RPA): By automating up to 85% of repetitive tasks like data entry and reconciliation , RPA ensures smoother and more efficient financial operations.
With these tools and processes, outsourced teams can transform slow, error-prone workflows into efficient, streamlined systems.
Sign 2: Company Growth Exceeds Staff Capacity
When your business grows faster than your team can handle, it’s more than just a minor inconvenience – it can lead to serious bottlenecks. In fact, over 45% of growing companies fail to meet key financial deadlines due to capacity issues . These delays can disrupt operations and hurt your financial stability.
Accounting Challenges During Growth
As businesses expand, accounting becomes increasingly complicated, often overwhelming even the most skilled in-house teams. This results in two major problem areas:
Transaction Volume Overload
- Monthly closes dragging on for more than 10 days
- Backlogs of unreconciled accounts
- Delays in processing invoices, which can strain vendor relationships
Regulatory and Compliance Issues
Growing companies face tougher regulatory demands. Without enough staff, 68% of them end up with at least one regulatory penalty . Multi-state operations, in particular, struggle – 57% of businesses report challenges managing payroll taxes across multiple states .
Outsourcing: A Scalable Solution
Outsourcing offers a cost-effective way to address staffing shortages, with savings of 38-45% compared to hiring in-house . It also provides flexible solutions that adapt to your company’s growth stage:
- Early Growth: Basic accounts receivable (AR) and payroll support (used by 73% of businesses )
- Expansion: Teams that scale from one accountant to four or more as needed
- Peak Operations: Around-the-clock processing through global teams
For instance, an e-commerce company achieved 99% invoice accuracy while handling a 300% surge in orders, thanks to outsourced accounts payable (AP) teams .
"Outsourcing lets growing companies reduce payroll costs by $162,000 annually while tripling transaction capacity "
Sign 3: High Costs and Low Performance
On top of staffing shortages (Sign 2), poor spending decisions can further hurt your business. Managing an in-house accounting team often leads to higher costs with diminishing returns. Studies highlight how this combination drains resources, impacting both finances and operations.
Comparing In-House and Outsourced Costs
Here’s how the expenses stack up for a typical mid-sized business:
Core Operating Expenses:
- Staff Costs: $60k–$90k salaries plus 20–30% benefits vs. pay-per-use pricing
- Software: $1k–$5k per user vs. often included in outsourcing packages
- Errors: $5k per month in internal corrections vs. costs typically covered by outsourced providers
Why Outsourcing Saves Money
For businesses already dealing with staffing and operational challenges, outsourcing often leads to better cost management and improved performance. According to a Deloitte survey, 59% of companies reported saving money by outsourcing .
The performance gap is hard to ignore:
- Outsourced teams deliver 98% accuracy and close books in 5–7 days, compared to 82% accuracy and 10–15 days for in-house teams .
- Cost-per-transaction drops from $4.75 in-house to $2.50 with outsourcing .
"Studies show outsourced accounting reduces error rates by 15–20% while cutting monthly close time by 25–40%. Meanwhile, businesses save $50,000–$150,000 annually compared to maintaining in-house teams."
These savings and efficiency boosts can directly resolve the operational bottlenecks mentioned in Sign 1.
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Sign 4: Outdated Methods Create Risk
Outdated methods in financial processes aren’t just inefficient – they’re risky. As financial regulations and standards evolve quickly, relying on manual processes or legacy systems can leave businesses exposed. For example, new environmental and governance disclosure requirements demand advanced tracking and reporting tools that older systems simply can’t provide . These risks add to the operational delays highlighted in Sign 1.
Consequences of Poor Compliance
Old systems can derail efforts to tackle earlier issues like slow processes (Sign 1) and staff shortages (Sign 2). One manufacturer discovered this the hard way when using spreadsheets resulted in $25,000 worth of audit corrections due to a 20% error rate .
Here are some common outcomes of outdated systems:
- Tax Compliance: Missed deadlines or incorrect filings can lead to penalties exceeding $10,000 from the IRS.
- Audit Performance: Failed audits and restatements often result in corrections costing $25,000 or more.
- Fraud Prevention: Weak internal controls may cause businesses to lose up to 5% of their annual revenue.
- Investor Relations: Damaged credibility can lower valuations and drive away potential investors.
One construction firm fell victim to embezzlement due to paper-based tracking. They only regained financial control after outsourcing their accounting, which introduced digital audit trails and robust internal controls .
Expert Help Through Outsourcing
Outsourcing accounting functions can modernize processes and reduce compliance risks. Here’s how nearshore accounting teams help:
- Certified Expertise: CPAs with updated GAAP/IFRS certifications provide quarterly compliance reviews.
- Automated Systems: Tax compliance is streamlined with automation, removing the need for manual work.
- Standardized Workflows: Well-documented procedures ensure you’re always audit-ready .
"A healthcare startup achieved profitability 18 months faster after outsourcing enabled real-time expense tracking. Meanwhile, a restaurant chain transformed investor confidence by replacing manual books with outsourced Power BI dashboards showing real-time P&L metrics across locations."
This illustrates how outsourcing isn’t just about efficiency – it shields your business from the steep costs of compliance failures while building confidence among stakeholders.
Sign 5: Difficulty Finding Qualified Staff
A staggering 43% of businesses face challenges due to a shortage of accounting talent . On average, it takes 40 days to fill a vacancy, which only worsens existing gaps in operations. These staffing issues often tie back to earlier problems like delayed reporting (Sign 1) and compliance risks (Sign 4), creating a ripple effect of vulnerabilities.
Effects of Staff Shortages
Staff shortages in accounting don’t just mean unoccupied desks – they disrupt operations in ways that can severely impact a business:
- Financial Reporting Delays: Companies with unstable accounting teams take 25% longer to close their monthly books . This delay hampers timely decision-making and strains relationships with stakeholders.
- Compliance and Errors: Staffing transitions lead to financial reporting errors in 34% of businesses . For example, one manufacturer faced $50,000 in penalties after missing tax deadlines during a staffing gap .
Outsourcing as a Staffing Solution
For businesses grappling with growth (Sign 2) and outdated systems (Sign 4), outsourcing offers a practical way to address staffing challenges. Here’s why:
- Reliable Coverage: Outsourcing providers ensure 99.5% service continuity with cross-trained teams and backup staff .
- Access to Expertise: Outsourcing gives companies immediate access to skilled professionals at 38-45% lower costs compared to hiring in-house (Sign 3). These teams also maintain an 87% compliance rate with complex standards, compared to 63% for in-house teams . This is especially critical for meeting requirements like ASC 606 (Sign 1).
"A tech startup gained access to IFRS experts through outsourcing that helped secure international funding."
Conclusion: Is Accounting Outsourcing Right for You?
Signs It Might Be Time to Outsource
If your business struggles with issues like delayed reporting, overworked staff, rising costs, compliance risks, or difficulty finding skilled talent, it might be time to consider outsourcing. These challenges often point to inefficiencies that external accounting support can address.
Steps to Begin Outsourcing
Switching to outsourced accounting takes careful planning. According to IBISWorld, outsourcing often becomes cost-effective for businesses with $2M or more in revenue. Here’s a step-by-step guide to get started:
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Evaluate Your Current Processes (30 Days)
Take a close look at your workflows to identify where delays or inefficiencies are happening. For example, one company reduced reporting times by 15% within three months by addressing bottlenecks . -
Transition Gradually (60-90 Days)
Begin by outsourcing simpler tasks, like transactional work, before moving on to more complex areas like financial planning .
When choosing an outsourcing partner, look for firms with expertise in your industry, strong cloud technology capabilities, and a focus on compliance.
Many businesses see clear benefits from outsourcing. For instance, a SaaS startup successfully secured $5M in funding after outsourcing their financial modeling, highlighting the impact of expert financial support .
