It demands a lot of effort to develop and sustain a well-managed in-house accounting team capable of executing best practices for your enterprise.
Managing an accounting unit demands time and energy – time that could be more productively applied to growing your business. So how do you get out of the business of building an accounting department and back to developing your company?
There are two pathways many small and mid-size enterprises can use to get bookkeeping and accounting administration off of their course:
1- The CPA firm, and
2- Outsourced Accounting Service Firms
The CPA FIRMS:
Usually, business owners see a CPA firm as a one-stop shop when it comes to their financial management and will ask them to provide bookkeeping and accounting services. And while most CPAs do offer a wide range of services to complement specific business’s needs, their principal focus is compliance requirements of the FIRS, banks, and investors – taxes, audits and advisory services. Unusually are they focused on bookkeeping or management accounting.
The way many small/medium size CPA firms provide bookkeeping services to their clients is to have a single bookkeeper on the account who does all of the accounting and a CPA who reviews the finished product. Many times they are doing “write-up” or “after the fact” bookkeeping. While this is OK for staying in compliance or preparing for taxes, it is not the most reliable way to get up-to-date information to run your business.
OUTSOURCED ACCOUNTING SERVICES:
While Outsourced Accounting Services may differ in their approach, most afford a team of resources that are dedicated to your business and it’s financial processes. You may get a bookkeeper who does transaction processing; a staff accountant that provides month-end close; and an accounting manager who oversees the team, ensure procedures are correct and the reporting package is delivering value.
Outsourced Accounting Services operate on a flexible model where they allow a business to choose from a menu of services that would best serve their needs. For example, a business might have an in-house employee who does billing and collections and the Outsourced Accounting Service team may do the month-end close process, which includes banking and credit card reconciliations, producing financial statements, if needed and other associated concerns.
CPAs Provide Compliance and Outsourced Services Provide Reliance!
One differentiator between a CPA firm and an Outsourced Accounting Service is that CPAs typically focus on Compliance, whereas Outsourced Accounting Services focus on Reliance – providing financial intelligence you can rely on to make knowledgeable financial decisions.
Compliance ensures the matters that need to be done get done. Reliance is having your fingertips on the financial pulse of the organization and actionable financial intelligence.
For instance, one of the most critical decisions a CEO or business owner can make is on pricing. If your accounting is Compliance focused, you will not get visibility into profitability by customer, job or marketing spend. If your accounting is Reliance focused, you can slice and dice the information any way you want.
CPA and the Outsourced Accounting Staffing Model!
CPAs traditionally work with a bookkeeper in order to fulfill the accounting needs of a business. Because the middle level of staff or senior accountant is missing at a CPA firm, significant internal controls may be missing which ensure data integrity. More often than not, a CPA firm does not offer a ‘real-time’ controller who can supervise the bookkeeper, solve problems with the accounting, as well as be responsible for managing a true month-end close.
CPAs often deliver management reports that controllers typically deliver, but their time is greatly limited during certain periods, i.e. tax season.
Outsourced Accounting Services permits businesses to choose from a menu of services and cater it to their unique needs. They invest in continual training of staff in the latest technology and innovations and meet the real-time needs of a business including billing, collection, bill payment, and cash flow forecasting.
Most importantly, they render the management accounting reports that can help a business enhance performance and profitability.
The Differences Between CPA and Outsourced Accounting Account System Design:
CEOs should partner with someone who knows how to unleash the powers of their financial software. Many outsourced companies are experts in accounting system design. At times, CPAs traditionally do not have the time and money to invest in training on processes to teach their executives how to fully optimize all the capabilities in accounting software like ZohoBooks and QuickBooks and what they have to offer their client.
For instance, you can add custom fields into QuickBooks and code each transaction to be able to report on anything you want to see. By using custom fields, you can see custom reports on profit and loss by the team, customer, job and anything else that is important for your business.
Which Should your Business Choose?
Deciding between a CPA and an Outsourced Accounting service depends on the state of your enterprise. The best result for your business would be to have a CPA working alongside with an Outsourced Accounting Service; though, that might not be possible for all businesses. If your business needs compliance and has a sound internal accounting team, a CPA is probably going to fulfill your business’s demands.
However, if you only have a bookkeeper, outsourcing to an accounting service who partners with your CPA is the best way to gain both reliance and compliance.