5 Warning Signs It’s Time to Outsource Your Accounting Department
Solid accounting is the cornerstone of your business—no matter your size or industry.
But handling it in-house isn’t always the best approach. Between staffing challenges and overhead costs, full-time accounting staff can be hard to come by (and sustain).
Luckily, there’s an alternative: outsourced accounting. Remote, contracted accountants can offer affordable services that are easy to scale and customize.
How do you know if (and when) outsourced accounting is right for your business? Below, I’ll break down three positive signs that outsourcing might be the best course—and two common problems that an outsourced accountant could help you resolve.
What Does Outsourced Accounting Look Like?
Before we dive into these signs, let’s touch on what outsourced accounting actually looks like:
- As a business owner, you’ll connect and contract with a remote accounting pro, often via a managed accounting firm.
- Your outsourced accountant works on an as-needed basis and normally on a mutually agreed-upon scope of work. They will tailor their support to meet your needs. It is less about the amount of hours worked and much more about the quality of the output and ensuring all deliverables are met.
- Outsourced accountants aren’t on the payroll; instead it is normally just a flat fixed fee. No more having to worry about recruiting, managing, payroll taxes, employee benefits, or firing. All focus is on the accounting work and delivering on this vital function.
“Fractional accounting” is a similar concept: Fractional accountants, controllers, and CFOs work on a part-time basis (usually remotely).
While the benefits of this model deserve a guide of their own, let’s note just a few of the advantages of outsourcing accounting:
- It’s more affordable.
- Outsourced accountants bring wide-reaching experience to the table.
- It’s easy to scale services according to your needs—up or down.
Good Problems: Positive Motivators for Outsourcing Accounting
Business owners don’t just turn to outsourcing to address major problems—they also outsource when business is good. Let’s start with a few positive circumstances that could lay the groundwork for a fractional approach.
#1 Major Growth
If you’re in a major growth phase, you might be contending with extra revenue, a longer list of customers, and increased purchasing needs to meet production demands—all of these are good problems to have.
But managing your growth is just as important as growth itself.
An outsourced accountant can help you:
- Make the most of new revenue – Not sure whether to pad your savings account, hand out holiday bonuses, or buy a new piece of equipment with your newfound cash? A fractional accountant can build a spending (and saving) strategy when you’re raking it in.
- Scale the smart way – Even if you’re growing, you might not have a clear picture of your capabilities—can you afford to hire additional staff? How much production expansion is practical right now? Outsourced accountants can help develop budgets and cash-flow projections so you can make better decisions informed by data. They also have the experience to tell you what sustainable growth actually looks like—and help you scale realistically.
#2 Exciting Changes
Growth and change don’t always go hand-in-hand. But even if you don’t expect to grow during a transition period, this doesn’t make change any less exciting—or challenging.
Outsourced accountants can help guide you through major transitions like:
- Legal status changes – Changing between an LLC, C-Corp, or S-Corp is a multi-step process—one that needs multiple sets of eyes to get right.
- Benefits changes – If you’ve reached a stage where you can offer new employee benefits packages (like expanded insurance coverage, stock options, or a new PTO system), an outsourced accountant can help find creative solutions tailor-made for you.
- M&A – Getting ready to sell? Have your sights on absorbing a competitor? An outsourced accountant will get your house (and your books) in order and help you make the right strategic moves during mergers and acquisitions.
#3 Staff Scope Creep
For small and mid-sized businesses especially, staff often wear many hats. And having your VP of Ops double as an AP clerk or asking your long-time receptionist to process credit apps might seem like an efficient approach.
Besides, isn’t this just cross-training? Doesn’t it just mean that you have an ultra-adaptable team that can tackle anything?
While there’s something to be said for redundant skills, you have to wonder: Are you missing out on opportunities by delegating accounting tasks to non-accountants? Are you about to make the year-end close process a lot more complicated?
Letting an outsourced accountant manage the books will both:
- Free up time for your staff to do their primary jobs and focus on their own core competencies.
- Improve the overall quality of your accounting processes and documents.
Red Flags: Problems to Solve with Outsourced Accounting
Let’s break down some common problems you might face on your business ownership journey—challenges that you can overcome with outsourced accounting support.
#1 Financial Struggles
The startup stage. Unexpected industry disruptions. Economic downturn.
Every business will contend with financial challenges. And, even if you’re working with limited resources, partnering with an accountant could be the key to righting the ship.
Outsourced accountants can help you:
- Use the resources you have to your fullest potential
- Maintain quality documentation (and keep the IRS off your doorstep)
- Identify (and correct) inefficient spending
Most importantly, they won’t contribute to personnel costs as much as an in-house hire. Since overhead is one of the first things to hit the chopping block during slow periods, outsourcing offers an opportunity to solve problems without blowing your remaining cash reserves.
#2 Staffing Challenges
Even if you can afford to hire an in-house accountant, you might not be able to find one. A Fortune report from 2024 estimated that, at the time, the US was short 340,000 accountants—and 12 months isn’t long enough to solve this problem.
How do you get the accounting support you need in this kind of shortage?
By outsourcing.
Today’s workforce values flexibility and novelty; that’s why accounting pros are flocking to part-time contract jobs.
If you’re a little old-school, you might not like the idea of a remote accountant. But you simply may not be able to find (or keep) a full-time, in-house pro anymore—yet another reason to embrace the future of accounting.
Quadrant Advisory: Turning Problems into Opportunities
You don’t just need to lean on your accountant when times are tough. You can benefit just as much from financial expertise when you’re comfortably in the black.
But opting for outsourcing instead of in-house accounting is the future—and that’s a good thing. Fractional accountants working with multiple businesses in various industries gain skills and experience across sectors. These translate to valuable insights and creative solutions, no matter your niche.
If you’re in search of passionate fractional finance partners, turn to Quadrant Advisory: We help today’s companies turn numbers into results by offering outsourced accounting, controller, and CFO services to businesses across the size continuum.
Ready to embrace a fractional future? Book a free consultation now.
Sources:
Fortune. The US is Short 340,000 Accountants—Just Look at the Wave of Earnings Report Mistakes. https://fortune.com/2024/03/01/accounting-shortage-earnings-report-mistakes/