When doing my research on outsourcing, I discovered something that blew my mind. In 2023, the global business process outsourcing (BPO) market size reached an estimate of USD 289 billion. Earlier this year, statistics say that the market reached 314.21 billion.
The growth of the outsourcing industry has left statisticians wondering. Many are predicting that the market will touch USD 739.4 billion by 2033, highlighting the compound annual growth rate (CAGR) of 8.9% from 2024 to 2033.
Outsourcing has become like Merlin was for Arthur - a helping hand to businesses. It is not about saving money anymore; it has become a way of living in order to improve and aim for a successful business.
Corporations get many services outsourced, here is a small list of the many services that are outsourced now:
Information Technology
Digital/Content Marketing
Legal Services
In today’s blog, we will focus on outsourcing accounting and bookkeeping services.
So let’s get started without anymore delays.
Define Outsourcing Accounting and Bookkeeping Services?
All businesses have an accounting department. However, that doesn’t necessarily mean it's an in-house team.
Thus, outsourcing accounting and bookkeeping is basically having an external accounting department manage your in-house accounting needs. It will provide the usual day-to-day accounting tasks such as sales invoicing, financial reporting, transaction processing, and more.
With outsourcing, you get the perks of working with experts. This advantage ensures scalability, efficiency, and helps streamline your business operations.
The Evolution of Outsourcing in the Accounting Industry
Way back in the mid-19th century, in Great Britain, firms like Deloitte were doing something pretty cool. They were offering specialized accounting and auditing services. Think of them as the original outsourced accountants!
This practice really took off with the rise of the 'Big Four' accounting firms like PwC and Ernst & Young. These firms solidified the outsourcing trend by offering comprehensive accounting services to a diverse range of clients.
So, most of us are aware that traditional accounting used to be a manual process filled with errors and time-consuming tasks. Then it underwent a dramatic transformation due to technological advancements.
Computers! The introduction of these devices marked a significant turning point, with spreadsheets and early accounting software revolutionizing the field.
The Role of Technology in Outsourcing Accounting and Bookkeeping Services
After years of evolution, accounting technology has reached new heights with the emergence of advanced software solutions, cloud computing, artificial intelligence (AI), and blockchain.
These innovations have fundamentally altered how accounting services are delivered, making them more efficient, accurate, and secure.
As technology continues to evolve, we can expect even more innovative solutions. Artificial intelligence, blockchain, and robotic process automation are just a few examples of emerging trends that will further shape the industry.
Here's a breakdown of how technology has played a crucial role:
Improved Accessibility
Provides Real-time Updates
Enable Scalability
Enhanced Security
Automation
Integration
Remote Collaboration
Data-driven Insights
Why Should I Outsource My Bookkeeping?
Imagine you're trying to build a house. You could do everything yourself: lay the foundation, frame the walls, install the plumbing. But wouldn't it be easier and more efficient to hire professionals who specialize in each area?
That's the idea around outsourcing your bookkeeping. Instead of trying to handle all your financial records yourself, you can hire experts who are specifically trained and experienced in that field.
So, while it might seem tempting to handle your own bookkeeping, consider the benefits of outsourcing. It could be the key to saving time, money, and stress.
Average Costs of Outsourcing Bookkeeping Services Verses In-house Bookkeeping
Let’s make one thing clear, it is without a doubt obvious that outsourcing bookkeeping is much more lower in costs compared to having an in-house bookkeeping team.
While, Outsourced bookkeeping typically starts at around $1,500/month, the average salary for a bookkeeper is $44,491 in the United States. The average cost to an employer for benefits is $5,953/year in 2022. The average cost-to-hire is around $5,000.
So the overall cost of an in-house bookkeeper approaches $50,000/year. More if you hire someone with accounting experience.
A Guide to Outsourcing Your Bookkeeping with ASL BPO
Before choosing to outsource your bookkeeping, you need to understand what exactly you are looking for in your business.
Decide the type of service you want to get outsourced and how having it outsourced will benefit you and your business.
These are for the freshers in business process outsourcing - Always make sure to weight the pros and cons of outsourcing a certain service before making any final decisions.
Types of Outsourced Bookkeeping Services
Payroll Processing: this is a process that has to take place in order for employees to get paid without any complications.
Accounts payable and receivable: Accounts payable tracks bills and payments owed to suppliers for goods or services received. It is a short-term debt. Accounts receivable manages invoices and payments owed to a company by its customers. Its a company’s largest source of short-term funding.
General Ledger Maintenance: It is the process of recording, classifying, and summarizing financial transactions in a company's accounting system. It requires accurate and up-to-date records of all economic activities, including accounts payable and receivable, assets, liabilities, and equity.
Weekly and Monthly Financial Statements and Reports: These reports provide a snapshot of a company's financial health, including income statements, balance sheets, and cash flow statements. These help you improve internal business performance by revealing important information or findings.
Balance Sheets: A balance sheet shows a company's assets, liabilities, and equity at a specific point in time.
Credit Card Reconciliations: This process involves comparing the transactions in a credit card statement to the company's ledger to ensure and support accurate bookkeeping.
Cash Balance Tracking: Monitoring and managing a company's cash flow is essential for financial stability.
Monthly Closings: This is an accounting procedure that finalizes and closes out all financial activity for a business for the preceding month.
Sales Rep Commission Tracking and Reconciliation: This ensures that sales representatives are accurately compensated based on their performance.
Advantages and Disadvantages of Outsourcing for Your Business
When outsourcing we all want to inquire how this is going to make our lives easier. By learning about both the pros and cons of outsourcing, you can weigh each side and take the decision to outsource or not.
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Best 8 Outsourcing Accounting Firms in 2024
With dozens of accounting firms now in arms reach, it is difficult to pick one or the other as they all have their own unique strengths. Despite the dilemma, here are a few of the companies we think you should check out.
Bookkeeper360, situated in Wood bury, was designed solely to aid small business owners with managing their company’s finances from one convenient location. It is known for simplifying back-office work, reporting payroll, and taxes.
Location: Wood bury, New York
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CliftonLarsonAllen (CLA) is a leading professional services firm that offers a wide range of accounting services to businesses and individuals. CLA is known for its expertise in various industries. They have a strong presence across the United States and offer both in-person and remote services.
Location: Minneapolis, Minnesota
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Fully Accountable is an outsourcing accounting firm that is known for its specialization in the ecommerce industry. They offer highly scalable plans that range from basic outsourced bookkeeping to more customer-tailored solutions.
Location: Ohio, USA
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Maxim Liberty has been out in the world since 2005. The company is known for its affordable virtual bookkeeping services and for guaranteeing their prices and services.
Location: San Juan, US
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5) TOA Global
TOA Global was founded by Nick Sinclair of Australia, TOA Global. This company provides offshore accounting services to accounting and bookkeeping firms in North America. Its staff consists of professionals trained in United States accounting practices by Certified Public Accountants.
Location: Philippines
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6) weConnect
weConnect is a privately owned company that specializes in helping businesses expand internationally by providing accurate, compliant global accounting and tax services. They work with your existing systems and offers flexible solutions to meet your unique needs.
Location: Asia & Oceania, The Americas, Europe, and Africa & Middle East
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Expertise Accelerated is a trusted accounting outsourcing firm, founded in 2021. The company provides services like tax preparation, payroll, bookkeeping, and financial reporting. They help businesses of all sizes streamline their accounting processes, improve accuracy, and save time.
Expertise Accelerated offers affordable rates and commitment to customer satisfaction making them the ideal partner for your business.
Location: Greenwich, USA.
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8) Indinero
Indinero is a comprehensive financial management solution that offers bookkeeping, accounting, tax, and outsourced CFO services in one integrated package. Their cloud-based platform allows you to custom-tailor your plan to fit your business's specific needs, ensuring you always have the right level of support.
Location: Indiana, Oregon, or California
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Best Practices for Transitioning to Outsourced Bookkeeping
So, if you are still here then that means you are thinking about outsourcing your bookkeeping?
It's a big decision, but it can be a game-changer for your business. To make the transition as seamless as possible, let's talk about some best practices.
First things first: the plan. You need a clear roadmap. Figure out exactly what you want to outsource, when you want to do it, and who's going to be responsible for what. This will help prevent any hiccups down the line.
Next, training and onboarding. Make sure your outsourced team knows exactly what they're getting into. Provide them with all the necessary information, tools, and access. And don't forget to set up regular check-ins to ensure everything is going smoothly.
Finally, clear expectations. Everyone involved should be on the same page. Discuss what you expect from the outsourced team and what they can expect from you. This will help prevent misunderstandings, maintain transparency, and ensure a successful partnership.
By following these steps, you can make the transition to outsourced bookkeeping a piece of cake. Remember, it's all about planning, communication, and collaboration.
The Future of Outsourcing: 7 Key Trends
Buckle Up, It's Gonna Be a Wild Ride!
The outsourcing industry is in for a major shakeup, and here's why:
Trend 1: Security Gets a Major Upgrade
Remember all those crazy cyberattacks that exploded during the pandemic? Yeah, those aren't going anywhere.
Outsourcing companies are gonna have to become security ninjas, with multi-layered defenses to keep your data safe. It's like building a fortress around your information!
Trend 2: Top Talent is Playing Hard to Get
Those days of companies having all the power are over.
Employees are realizing their worth and are pickier than ever. This means outsourcing companies will have to compete fiercely to attract the best talent, offering remote work options and flexibility to become the ultimate employee magnet.
Trend 3: The Cloud Takes Over (Almost Everything)
Remote work is here to stay, and with it comes the need for cloud-based everything. Imagine a world where all your data and tools are accessible from anywhere, anytime.
That's the cloud's magic, and outsourcing companies will be all over it!
Trend 4: The Remote Revolution Keeps Rolling
Truth be told, Remote work is going to take over the world.
Outsourcing companies with experience in managing remote teams will be all the rage. Plus, with tons of people loving the work-from-anywhere lifestyle, offering remote options will be a surefire way to attract top talent.
Trend 5: Mergers and Acquisitions: The Outsourcing Hunger Games
Just like in the Hunger Games, outsourcing companies will be fighting for dominance.
Big players will be gobbling each other up (in a good way!), merging and acquiring to offer a wider range of services and become industry giants. Think of it as the ultimate power move!
Trend 6: AI and Automation: Not Taking Over, Just Lending a Hand
Artificial intelligence (AI) is getting smarter by the day, but it's not here to steal your job (yet!). Instead, AI and automation will become valuable teammates in outsourcing, handling repetitive tasks and leaving the complex stuff for the human brain.
It's like having a super-powered assistant to boost your efficiency!
Trend 7: Outsourcing Goes Global
The world is your oyster when it comes to outsourcing! With technology making remote work seamless, companies will be looking beyond the usual outsourcing hubs.
Think Africa, Eastern Europe, and even the Caribbean islands – the outsourcing map is about to get a whole lot bigger!
So, the future of outsourcing is all about security, top talent, flexibility, and embracing technology. It's a world of remote work, fierce competition, and exciting possibilities. Buckle up, because it's gonna be a wild ride!
Parting Thoughts
Outsourcing has been a trend for a while now and it will keep rising in the industrial market in the future. Thus, Outsourcing your accounting and bookkeeping can be a game-changer for your business. It will free you from tedious repetitive tasks, allowing you to focus on core strategies that drive growth.
Imagine having access to expert financial guidance, real-time data insights, and scalable solutions – all tailored to your specific needs.
Explore the options presented here, or research other providers to find the perfect fit. Remember, a well-chosen outsourcing partner can be the key to unlocking financial efficiency, peace of mind, and a brighter future for your business.
What are you waiting for, take the first step today!