When Should CPAs Outsource Accounting?

Outsourcing has become a critical strategy for small and mid-sized accounting firms across the USA. These firms are grappling with severe staff shortages, rising inflation, and intense competition. To overcome these challenges and maintain a consistent revenue stream, many CPA firms have started to outsource accounting.

Accounting outsourcing is a proven method for CPA firms to reduce operational costs and boost profits. It is often considered by firms looking to expand their capacity to manage increased workloads, especially during peak seasons.

Companies that specialize in outsourcing are adept at understanding and addressing the specific challenges of the accounting industry. They offer customized staffing solutions that do more than fill gaps; they enable CPAs to focus on strategic growth by managing complex compliance issues, thus allowing firms to concentrate on their core business activities.

Various factors influence the choice to engage in accounting outsourcing, including workload, existing services, firm capacity, and growth goals. Making the decision to outsource requires careful consideration of these elements.

If you’re wondering whether now is the right time for your firm to start outsourcing accounting processes, here are several essential considerations to help guide your decision.

The ongoing talent shortage has placed significant pressure on the US accounting industry, limiting the expansion capabilities of numerous CPA firms. To navigate these constraints and achieve their growth objectives, small-sized firms face a formidable challenge.

In today’s market, accountants and CPAs need to reduce their firm’s operational costs to manage competitive pricing pressures and sustain profitability. Given the current challenges associated with onshore hiring and staff retention, which are both costly and complex, outsourcing emerges as the most practical solution. This approach not only addresses staffing issues but also allows firms to focus on strategic growth and client service enhancement.

Outsourced accounting helps CPAs beat their staffing woes permanently with easy, efficient, and cost-effective offshore hiring. Outsourcing providers hire talented resources from top outsourcing destinations like India and train them extensively to take over your firm’s cumbersome compliance processes, thus freeing up your internal team.

To counter all the above challenges and ensure a profitable future for their firms, CPAs must sincerely consider outsourcing their accounting requirements. Some of the top outsourced accounting firms provide additional support to small-sized CPAs to grow and prosper quickly.

Also read: Accounting Outsourcing: The Strategy CPA Firms Need in 2022

Critical Indicators of the Right Time to Outsource for Accounting Firms

1. Quick Team Scalability is a Must-Do

Accounting outsourcing with a reliable provider can make you forget your team’s scalability concerns forever. Accounting outsourcing companies give CPAs exclusive access to offshore experts, who are specialists at running compliance functions. Based on their requirements, accountants and CPAs can hire one or multiple resources to manage their workload.

In addition, outsourcing offers the benefit of uninterrupted resource availability. This means that CPAs no longer have to worry about staff vacations, unexpected absences, or resignations during the peak season.

2. Expansion of Service Portfolio

Post the pandemic, it has become more necessary than ever for accounting firms to expand their portfolio beyond the basic bread and butter services. Clients appreciate finding a varied set of services under one roof instead of partnering with multiple providers.

Apart from basic accounting, bookkeeping, audit, and taxes, services such as advisory and practice transformation are in huge demand among clients. While these services sound lucrative, adding them to one’s portfolio is not easy. New services take more time and additional resources to find ground among the target audience.

Outsourced accounting services play a crucial role in helping firms expand their service portfolio. When you have a dedicated offshore team taking care of your core tasks, your in-house team can spare time on value-based services, thus enabling CPAs to add new services to their existing offerings.

Also read: Virtual Accounting Vs Outsourced Accounting 

3. Client Acquisition and Retention

Small and mid-sized firms actively look to grow their clientele to increase their revenue and earn higher profits. However, attracting new clients is a challenge if your firm doesn’t offer a complete gamut of services.

As discussed above, adding more services requires firms to build more capacity. This is where accounting business process outsourcing can be crucial.

CPAs can quickly expand their team with accounting outsourcing without incurring huge costs. When you have a vast team to provide your basic and value-based services, acquiring more clients and retaining existing ones becomes easy.

4. Work Volume Surpasses Resource Capacity

The staffing shortages in the US accounting industry need no introduction. Fewer resources mean that accountants are often overworked beyond their capacity. This is the primary reason CPA firms struggle to meet deadlines and provide value-based services.

With outsourced accounting services, accounting firms do not have to spend time searching for skilled resources. Top outsourcing providers enable easy and hassle-free hiring of offshore resources, thus saving critical time and facilitating a faster turnaround.

Moreover, with outsourced accountants, CPAs can segregate their tasks among their in-house team and the offshore staff, thus facilitating better work management.

Also read: 5 Tips for Using a Virtual Accounting Staff for Your CPA Firm

5. Integrating Latest Infrastructure and Tools

Small and midsize accounting firms do not have the financial capacity to regularly purchase the latest software or improve their infrastructure. Accounting outsourcing companies can help with this, too.

Top accounting outsourcing providers work with the latest technology and train their offshore experts on the latest accounting and bookkeeping software. Thus, CPA firms can integrate the latest technology and infrastructure into their processes without incurring massive costs.

With outsourced accounting services, your processes can become faster and error-free and help boost your firm’s efficiency.

Conclusion

Accounting outsourcing is the need of the hour for small and mid-sized accounting firms to achieve their growth goals in the post-pandemic world. In fact, outsourcing could be the future of staffing for the US accounting industry.

There is no established thumb rule to determine the right time to outsource. However, accountants and CPAs should consider outsourcing their accounting needs in the post-pandemic world to build capacity and scale quickly.

Besides the post-pandemic challenges, accountants and CPAs must assess their goals and evaluate their firm’s capacity to make the right outsourcing decision. If your firm has been struggling to sustain itself in the current scenario, let alone make profits, it may be the right time for you to consider outsourcing.

However, to get the most out of outsourcing, CPAs must team up with a top outsourced accounting firm. If done correctly, accounting outsourcing can be a turning point for CPA firms.