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QX The Definitive Guide To Outsourced Bookkeeping Services

The Definitive Guide To Outsourced Bookkeeping Services

We live in the best times but also in the worst of times, veering more towards the latter than the former. Economic uncertainty resulting from the pandemic will haunt businesses across sectors for many years. What’s more, the pandemic drove businesses, including CPA firms, to pivot to new work models (WFH), transition to more lucrative services (business advisory), and focus on bringing down CAPEX and OPEX and still drive growth.

The accounting industry is constantly trying to address questions around business growth, talent shortage, maximizing value, motivating accountants, exploring high-margin services, and keeping costs in check.

There is no beating outsourcing when it comes to bringing costs down and still getting the job done. This stays true for accounting as well. Outsourced bookkeeping services help CPA firms scale big, cut costs associated with compliance-related tasks and maximize value from bookkeeping services. It doesn’t matter if they are not earning enough from bookkeeping services; they can put economies to scale to work and generate more revenue.

To put it simply, outsourced bookkeeping services make great sense. So, let’s dig a little deeper.

What is Bookkeeping Outsourcing?

Outsourced bookkeeping services refer to those offered by an external bookkeeping expert who will handle all your company transactions promptly and accurately. Bookkeeping services include the recording of a company’s financial transactions regularly. With proper bookkeeping, you can track all information on your books to make informed operating, investing, and financing decisions.

Why Outsource Your Bookkeeping?

Why decide to send your client’s bookkeeping work to an outsourcing provider? If the answer to this question stops at saving money, you haven’t thought through this service model. This is because outsourcing your bookkeeping tasks brings many benefits other than the economic benefits.

Here’s why you should outsource booking:

  • Reduce bookkeeping costs: The cost advantage of outsourcing isn’t a surprise and, quite frankly, is one of its most significant advantages. With outsourced bookkeeping services, you are moving bookkeeping tasks to outsourced bookkeepers working for an outsourcing provider who is not on your firm’s payroll. They work out of geographies where labor isn’t as costly, so you benefit from labor arbitrage too. You don’t pay a salary, no healthcare, no holiday cover, no bonus, nothing. You pay the outsourcing provider by the hour or sign up for a Full-time Equivalent (FTE) model, wherein this employee works as a full-time outsourced team member who is an extension of your internal team.
  • Quick and flexible scalability: With bookkeeping outsourcing, you access highly skilled bookkeepers without going through the long-drawn-out recruitment cycle and keep the hiring costs down. Outsourced bookkeepers are available at far lower prices than an in-house bookkeeper. You also get the advantage of flexible scalability, wherein you can scale up or down as per your need. The accounting world is facing a severe talent shortage issue, and the scalability that outsourcing bookkeeping offers is a huge benefit and will help you circumvent this problem.
  • Reduced infrastructure costs: The costs associated with hiring include infrastructure as well. You are talking about costs, including a new workstation, space, software subscription, etc. And some of these are recurring. If your firm is trying to cut costs, this is the kind of decision-making that will have you worried. Your bookkeeper will work out of the outsourcing provider’s delivery center using the provider’s resources. You save on your OPEX, which can be invested in other business growth activities.
  • Add expertise: Your firm might want to add bookkeeping to the list of services it offers but doesn’t have the expertise to do. And more importantly, you don’t want to add to your overheads while doing so substantially. All you need to do is get in touch with a reputed bookkeeping outsourcing services provider and add Full-Time Equivalent (FTE) resources to the team.
  • Transformative technologies: The accounting world is typically conservative when it comes to the adoption of new technologies. This can set the small and medium firms back if they compete for a slice of the accounting services market share. The key here is to make strategic investments to drive practice transformation. Two important pillars of this transformational exercise are data security and software. Working with an outsourcing provider will ensure your firm can leverage the best technologies to improve your workflow and processes.
  • Data Safety: With outsourced bookkeeping services, you will be adding another layer of security to the proceedings by doing business with a security-compliant outsourcing provider and using an advanced security ecosystem. It is important to remember that you shouldn’t see bookkeeping outsourcing as just a cost-saving exercise.

When Should Your Firm Outsource Bookkeeping?

The more straightforward answer here is when your firm is ready. But this readiness is underlined by specific problems that you might be facing. These problems can be:

  • Inability to find the right talent (read: bookkeepers) means your firm is losing out on valuable work.
  • Inability to explore other services because your time is spent in bookkeeping work.
  • You struggle to generate profits from bookkeeping services as clients demand discounts.
  • You are facing difficulties in revenue forecasting because you don’t have enough personnel to meet increased revenue targets. Again, this prevents you from going out there and looking for more bookkeeping work – it’s a vicious cycle.
  • You want to bring your overheads and cost of operations down.

Busting Misconceptions of Bookkeeping Outsourcing

Despite all the benefits of outsourcing and experiencing challenges that only outsourcing can solve, what stops CPA firms from getting clients’ bookkeeping work done from outsourced bookkeeping services providers. The answer lies in some of the prevailing misconceptions around outsourcing accounting work.

Let’s bust some of them:

  • I will lose control

For those CPA firms who have never outsourced before, the loss of control can be a deal-breaker. But there is no loss of control. While working with a reputed bookkeeping outsourcing provider, the reigns of your bookkeeping tasks are in your hands. You will be kept up-to-speed with the task’s progress, and you can give feedback at any time. If you think mistakes are happening, you can always flag them in good time to ensure error-free work.

  • I won’t be able to interview my outsourced bookkeepers/How do I know they are good?

You can interview them if you choose to go with a Full-time Equivalent (FTE) bookkeeper. Once you get in touch with the provider and discuss your requirement, the provider identifies the bookkeepers best suited for the job and who have the qualifications you demand. You can interview them and decide what works for you.

  • Work Timings

The FTE works during your office hours; we are talking about US hours. What could be better than that? And even if you go for a block-of-hours model, work assigned at the end of the day (US office time) can be delivered when you are back in the office. It is the outsourcing provider’s job to have a substitute bookkeeper (with the same skillsets) for the bookkeeper who’s taken a holiday.

  • I cannot trust the reputation

Why? Suppose the bookkeeping outsourcing services provider can give you proof of various accreditations, also proof that they confirm with the necessary security frameworks and have a list of happy clients willing to talk to you. In that case, there shouldn’t be any trust issues. Also, as we mentioned earlier, you get the opportunity to test the functional knowledge of bookkeepers, so you get holistic visibility into the overall accounting posture of the outsourced bookkeeping provider.

  • My employees will not be ok with it

This is a natural doubt to have. Existing employees fear redundancy if an outsourcing decision is taken. However, when it comes to CPA firms, you should bring up the point that it is just essential compliance work like outsourcing bookkeeping. This will help free up valuable time for your internal employees, which they can spend elsewhere.

  • My client will not be ok with it

This is an iffy one. If you are a firm that wants to get your client on board with the outsourcing decision, before you outsource their work to a bookkeeping outsourcing provider, the focus must be on the benefits. You can pass some of the savings to the client.

What's the Difference Between Virtual Bookkeeping and Outsourced Bookkeeping?

The difference between virtual and outsourced bookkeepers sometimes confuses CPA firms, which prevents them from making the right decision. All bookkeeping outsourcing is virtual bookkeeping, but not all virtual bookkeeping is outsourced bookkeeping. The word “virtual” means that services are provided through the internet. So, both bookkeeping outsourcing and virtual bookkeeping leverage the internet.

But, when you say you are working with a virtual bookkeeper, you are not necessarily outsourcing your work. The bookkeeper will be on your firm’s payroll but working from outside the office, home, or elsewhere. The pandemic has led to many accountants working from home and getting comfortable with the idea of working virtually. These are your virtual bookkeepers and your salaried employees. On the other hand, the outsourced bookkeeper works on your client’s projects but is not on the firm’s payroll.

How Do You Search for the Right Bookkeeping Outsourcing Provider?

Outsourced bookkeeping services can benefit your firm enormously. But this can only happen if you search for the ideal service provider. The best way of identifying an outsourcing firm you can trust is by asking for references. The internet is a never-ending repository of such service providers. Search for ‘bookkeeping outsourcing,’ and you will see many companies vying for your attention. Make a list, get in touch, evaluate, and choose.

Another easy way of searching for the right firm is taking a stroll through your email garden. Look for emails from outsourcing companies. If you are on their opt-in email list, you would have received regular emails from them. So go through them and list the providers you want to contact. There are no half measures here. You will need to get in touch with each of them who you think has the qualities you are looking for in a bookkeeping outsourcing provider.

So, what are these qualities?

Qualities of a reputed outsourced bookkeeping expert

A quality bookkeeping provider delivering outsourcing services is not shy about discussing what sets their service apart from the competition. They offer all the information to help your CPA firm make an informed decision. You must keep an eye out for expertise, experience, track record,

  • Expertise: Your preferred outsourcing partner should help you access bookkeepers with the kind of expertise you are looking for. They should have worked on US bookkeeping projects that would give you more confidence in their abilities.
  • Experience: A outsourced bookkeeping services provider who means the business will help you choose from bookkeepers with varying years of experience. Some might just be starting, while others will have many years of experience in delivering bookkeeping services. The costs will vary accordingly. If you think the bookkeeping work is pretty basic and can be handled by someone with limited experience, you can choose. Still, if the bookkeeping tasks are complex, you will need someone with the right expertise.
  • Track record: Delivering bookkeeping services is one thing, but having a successful history of delivering services that have consistently delivered positive outcomes for clients is quite another. So, look for a provider with a sterling record of having helped provide ROI-oriented bookkeeping services to clients. Proof needs to be offered in the form of client references.
  • Serious about data protection: How do you gauge the seriousness of a bookkeeping outsourcing provider concerning data security? Simple. Ask them to show their security framework certificates or reports. A reputed provider will adhere to SOC 2 and GDPR compliance at the bare minimum.
  • Proactive assistance: Obviously, you will set the ball rolling by reaching out and discussing your requirements. But how fast do the provider reply, and the depth of this reply will give you an idea about the quality you can expect from any service provider. A reputed outsourcing bookkeeping provider will be comprehensive about the kind of bookkeeping services they offer, answer all your questions, and even provide more clarity about stuff you had not thought of asking.
  • Thought leadership focus:  Remember we talked about going through your emails? Well, one of the best evaluation mechanisms is checking whether you have received non-sales emails from these firms. These would point you to some case studies, white papers, or even blogs written by these providers around bookkeeping and outsourced bookkeeping. This showcases their expertise and experience in the niche. If you like the information provided in some of these collaterals, the chances are that the associated outsourcing provider is the real deal.

Outsourced Bookkeeping Ties in With Business Growth

A massive cost advantage is associated with transitioning to being an outsourced bookkeeping firm. However, you also work with a strategic partner who can fuel your growth efforts. With an outsourcing provider, you don’t have to limit yourself to bookkeeping; you can outsource accounting or move to an outsourced payroll model. This way, you can scale your services and add more services to your portfolio. You free up your team that can focus on the more complex accounting tasks that pay more and enhance your firm’s reputation.

Bookkeeping Outsourcing: Onshoring Vs. Offshoring

Getting straight to the point: While onshoring refers to domestic outsourcing, offshoring involves outsourcing to providers outside national borders. An onshore outsourced bookkeeper works one-on-one or online with you to get your books done. They might be solo practitioners or be working with a bookkeeping firm. Even though firms might charge you slightly higher than what a freelance would do, when you outsource to a firm, during the absence of a bookkeeper, another expert can take over, so there are no service gaps. Offshore service providers offer bookkeeping services to CPA firms and businesses globally. When you avail of offshore bookkeeping services from providers located in countries like India, you can put an end to the overhead costs associated with in-house teams. By outsourcing your bookkeeping tasks to an offshore bookkeeping firm, you can delegate time-consuming tasks to an external organization based in another country. When choosing offshore outsourcing, you get your bookkeeping tasks done within a fixed time, with minimum errors and, more importantly, lower costs.

Data Security Concerns While Outsourcing Bookkeeping

With the alarming rate at which data breaches are reported every year, it feels like nobody can be safe from an attack. You might be doing your best to secure your sensitive data in-house, but is there no assurance that your third-party service provider will too? While outsourcing bookkeeping to an external provider, you must ensure your and your clients’ data safety.

Find out which certifications your bookkeeping service provider has earned. ISO 9001 and ISO 27001 are essential for establishing security protocols and are globally recognized for their top security measures. Also, look for PCI compliance, which is key to protecting customer data and sensitive financial information. Without such assurances, there is a massive chance of security vulnerabilities. But most global outsourcing providers adhere to best practices such as installing malware and are well-equipped with highly secured FTP servers to ensure data security during data transfer.

Apart from this, ensure that your bookkeeping outsourcing provider takes physical security measures such as:

  • Facility Security: Look at how your bookkeeping outsourcing provider handles security at the facility’s location. Ensure that they are in a secure area and house operations within special economic zones that require authorization to enter.
  • Surveillance: find out if your bookkeeping outsourcing partner has 24/7 video surveillance alongside security guards manning entrances.
  • Security Guidelines: Ensure that they block the use of removable storage devices, restrict data access to authorized users only, and control data transfer methods.

How Much Does It Cost to Outsource Bookkeeping?

Owning a CPA firm means you wear several hats, which can be daunting. One key reason accounting firms outsource their bookkeeping is that it is cost-effective. Outsourced bookkeeping rates range based on the number of transactions and their complexity. While some bookkeeping outsourcing providers charge you hourly, some have customizable packages to start from that offer a wide range of functions. Outsourcing your bookkeeping is highly cost-effective, considering the savings on the rates and the overhead costs. Most bookkeeping service providers offer the following engagement models, and you can choose the one that suits the nature of your project and its size.

  • Pay-as-you-go model: In this model, you will be paying only for the number of tasks or hours you have outsourced. A staff member will be appointed to your account as required and will use the best software to handle your firm’s and clients’ bookkeeping tasks. The pricing entirely depends on the hours they worked.
  • Dedicated Resource (FTE) model: If you choose this model, you will be assigned a dedicated team or individual to work exclusively on your project. They will report directly to you, just like your employee would. The payment model will include fixed resource rates. Accounting firms most prefer this with large volumes of work and those with measurable service-level requirements. With this engagement model, you are also likely to avail of discounts.

Outsourcing with QXAS

We are a seasoned outsourced bookkeeping service provider that helps accounting firms in the US access dedicated and highly qualified offshore bookkeepers. Fill the talent shortage and save up to 50% while outsourcing your bookkeeping to QXAS. Our bookkeeping experts bring several years of US experience and expertise to the table. Leave the burden of your and your clients’ bookkeeping tasks while you can focus on strategic accounting work and invest the saved time in high-margin revenue-generating activities.

Why Outsource Your Bookkeeping to QXAS?

  • Quick & Easy access to highly talented offshore bookkeepers with a minimum of 5+ years of experience
  • Save up to 50% on your bookkeeping tasks and increase profits.
  • Scale your firm by adding skilled outsourced bookkeepers to your team
  • Use saved time to explore new growth avenues
  • Choose the engagement model that suits your requirements
  • Say goodbye to data security concerns as our offshore bookkeepers leverage an IT infrastructure with ISO 27001:2013 certification for information security management systems.

Conclusion

The purpose of this guide was to give you enough information to make an outsourcing move with confidence. You don’t want to keep wondering whether outsourcing bookkeeping services was the right choice for your firm while your competitors started benefiting from the move. The time to outsource is NOW!

At QX Accounting Services, we partner with growth-focused accounting firms to aid their growth efforts. We are not just about cost but also big on quality and security. Contact us to know more about our bookkeeping outsourcing services.