Based on our past poll, the majority of those who responded do their own bookkeeping or have an internal staff person who performs this work. These results are not surprising since owners of small to medium-sized businesses in many industries focus initially on getting their primary operations up and running, “wearing all the hats” in the early years. However, over the past decade, more business owners are realizing the advantages of outsourcing their bookkeeping and accounting needs. ODs should understand this trend as well, as it could lead to their practices’ successful future growth.

Whether it’s technology, the health care environment, or your patient’s needs and preferences, the world in which we live rapidly changes and OD practices need to adapt to this fast pace. As you ponder the types of changes you need to ensure the success of your OD practice in the future, outsourcing your bookkeeping and accounting needs to a virtual accounting services provider should be part of that consideration. 

In this article, I’ll provide Answers to some Frequently-Asked Questions about Outsourced Virtual Accounting and demystify the process.

What exactly does it mean to virtually outsource my practice’s bookkeeping and accounting?

This means assigning to an outside professional(s) the responsibility for tasks normally assigned to a controller and chief financial officer within your business – a lot of times, this is you at the start of your practice. Tasks include finance and accounting services, such as cash flow management, general ledger management, and financial statement preparation and analysis. It also includes all related back-office support, such as payroll processing and tax filings, sales inventory management, accounts payables and receivables and other transaction processing. While you may choose to outsource only portions of your operations, such as payroll processing, many business owners take advantage of more full-scoped outsourcing to gain additional efficiencies. 

When you outsource your bookkeeping and accounting tasks to a virtual accounting firm, the firm will use technology to provide your services, without you having to provide physical office space. The firm can fetch, send and store your documents electronically. For example, your virtual accountant can set up automated workflows so that source documents such as your bank statements can be retrieved automatically each month, without you having to be involved in that administrative process. The firm uses applications, often cloud-based apps, to process and record your transactions, resulting in increased cost efficiencies due to automation and integration. You the business owner maintain control and 24/7 access to your data.

What are the advantages of outsourcing?

Easy Access to Specialized Knowledge: When hiring an outside, accounting services provider, you can tap into their specialized knowledge and insights gained from having worked with many other businesses. So instead of you personally having to learn and keep up with the latest technology to help you run your back office, you can rely on your outsourced professional to ensure you’re using the most proven cost-effective ways to process your transactions.

 Free up Your Valuable Time and Money: As you grow, by outsourcing your accounting, your practice will no longer have to endure the hiring process and lose valuable time and money training bookkeepers. And, by hiring a virtual firm, you’ll free up valuable space in your office and save on related overhead costs, including expensive employee benefits. Or, if you have been doing the accounting yourself, you can finally free up your time to focus on things more important to you and your practice and avoid costly mistakes that occur when you’re spread too thin across too many responsibilities.

Improve Internal Controls: Partnering with an independent professional provider to perform your bookkeeping and accounting allows you to implement a separation of duties across important financial transactions so that they are not handled by just one person. This helps strengthen your internal controls through proper checks and balances, preventing costly mistakes, including potential fraud. You also gain a second set of eyes to review your OD practice for blind spots in its accounting operations. See my post for more details.

Still on the fence? Then consider this 2018 Client Accounting Services Survey  According to the survey results, businesses that outsource all accounting report both hard and soft returns on their investment, including higher profits and revenues, being better armed to make business decisions, and enjoying an easier accounting experience. Survey results include:

  • 80% of respondents answered that Client Accounting Services (CAS) gave them more time to focus on the business.
  • 68% said that CAS makes accounting easier and efficient.
  • Respondents who outsourced their CAS reported a greater increase in profit and revenue than those who do not outsource. Almost one-quarter of those outsourcing worked with their accountant to create a plan for growth, further paving the path for long-term success.
  • Businesses open to new accounting technologies (most often introduced by their accountant) are twice as likely to report a higher profit than those who do not. 

What are the downsides to outsourced accounting?

One big downside to outsourcing would be if your service provider doesn’t bring the value you’re looking for. To avoid this risk, I recommend doing a little bit of planning before you reach out to any firms. This includes identifying your accounting needs; for example, whether you need help with bank and credit card reconciliations, inventory management, sales, and use taxes, accounts payable, etc. You should also identify your biggest “pain points” and the places where you spend a lot of time processing transactions.

 With the same diligence, you’d invest when hiring full-time staff in your practice, you should be prepared to interview prospective firms to understand their client service model and approach, and the pricing structure for their services. Once hired, regular communications with your service provider facilitates a strong client/service provider relationship, resulting in high-quality client service.

Will I lose control over my finances if I outsource?

The short answer is “No.” You will now have more control since you will have improved financials at your fingertips and have more time and money to plan instead of simply reacting to business events. What you’re delegating to your outsourced accountant is the heavy lifting related to processing and recording of the transactions. Professional accounting firms can leverage their experience and knowledge of technology to make these transactional processes more efficient and accurate, leaving them time to provide you with sound business advice as you make important financial decisions. You’ll have more accurate and timely financial information and an expert’s analysis of that information, while you retain the oversight and control and decision-making.

When is the best time to consider the transition to an outsourced model?

While every practice is different, here are some clues as to when it may be a good time to move your bookkeeping and accounting to an outsourced, virtual professional firm:

  • If you find yourself spending more time on your back-office functions than on patient care and growing your practice.
  • If you are having trouble finding and/or keeping competent internal bookkeeping staff.
  • If you’re encountering too many mistakes because you and your current staff are spread too thin.
  • If you’d like to pursue efficiencies using accounting technology but don’t know how and where to start.
  • If you’re drowning in a mound of paperwork and having a hard time keeping up with paying the bills, reconciling your bank and credit card accounts, or other back-office functions.

How Can I Find Out More About Outsourcing?

If you still have questions and/or would like to understand more about outsourced bookkeeping and accounting services, please reach out to me, I’ll be happy to talk with you. Orin Schepps, Founder and CEO @consultanceaccounting