Money is a sensitive topic.
According to a survey, approximately 35% of people who experienced relationship stress said money was the primary cause of that stress.
Money issues extend far outside of marriages and long-term personal relationships.
In business, money problems aren’t caused by the money itself, it’s what goes on behind the scenes to earn it and the responsibility that comes with revenue where issues arise. For the hundreds of business owners we’ve worked with on the accounting and bookkeeping side of their business, the money they earn requires a painstaking amount of preparation, paperwork, organization, and tracking.
Transactions have to be accounted for and have to be attributed to the proper accounts. Outside of the government’s interest in wanting to know exactly how much your business owes them, the only true way to know where your business stands and what it will take to reach your goals is to have a firm grasp on your financials and financial outlook for the near and long-term future.
Outsourcing your small business’ accounting is a way to put your books in capable hands and free up both time and money, rather than doing it yourself or hiring an internal bookkeeper and having to train and manage the employee. But, as any decision within your business, there are risks of outsourcing your small business. Here are five risks you need to be aware of before taking your books to the cloud and working with a virtual team.
#1. A Faulty Process
Most accounting service providers have controls in place to ensure proper execution of the process by its employees; senior level review, periodic calls with the client, etc. Kahuna Accounting, for example, carefully oversees processes and systems, analyzes accountant performance, and has a dedicated certified accountant assigned to each client to monitor their account, look for risks and errors, and answer any questions they may have.
Before outsourcing, ask the company about their process of handling a client’s bookkeeping and how they ensure your books will be in good hands. If they can’t answer this question, it’s likely best to keep looking for other options.
#2. Providing Inaccurate or the Wrong Information
An accountant is only as good as the information they’re given to work with. If you don’t have a way of carefully recording the right information and providing it to your bookkeeper, what you get out of your bookkeeping team won’t do you much good come tax time or when trying to analyze where your business stands.
That being said, a responsible outsourced team knows how to assist and guide you, and will know if the information you’re giving them is sufficient.
#3. Not Communicating with Company/Representative
Entrepreneurs are some of the world’s busiest people. As a financial team created by an entrepreneur, not an accountant, we know the time and commitment required of business owners, and are understanding when working with them. However, there are times when our accountants need to receive information that only the business owner or their administrative assistant or a co-worker can provide. If this information isn’t provided when needed, issues can arise and your bookkeeping can fall behind. Know what communication method works best for you. Communicate with the company you’re planning on working with to determine when and what you’ll need to provide them with and how to quickly resolve issues if you’re not able to respond to their emails, phone calls, etc.
#4. Losing Track of Where You Stand
The combination of outsourcing and utilizing cloud-based accounting software, which is what the virtual team will use to handle your books, provides the ability for you and your other advisors (CPA etc.) to constantly monitor the status of your books.
It’s a level of comfort that can allow you to sleep at night, but also lose track of where you stand. One of the best benefits of working with an accounting team, depending on their deliverables, is that you receive forward-looking statements and insight into your business that can help you to grow. If you’re not prepared to keep up with these statements and use them when planning and coming up with your short and long-term business strategies, you’re missing a huge opportunity.
Even if outsourcing, make time in your schedule to review documents and use the insight you’re given to plan ahead. Don’t lose track of where you stand just because you’re no longer doing your own bookkeeping.
#5. Turnover
Losing a bookkeeper is very difficult for a business to handle. Although one employee leaving a team of accountants is far less risky, if they were your primary contact, there may be a learning curve and some adjustment needed when assigned to a new representative. The good news is that you don’t have to hire and train your new representative.
Do your homework and make sure you and the company you’re going to work with understands expectations before signing a contract. Outsourcing your bookkeeping can help free up time and money to grow your business, but like any business decision, you must first consider risks before moving forward. If you need any help with your decision, we welcome you to consider Kahuna Accounting’s US-based accounting team. Just fill out the contact form and we’ll be in touch with you as soon as possible.