Financial management is at the heart of every business. One of the most crucial aspects of this process is bookkeeping. Whether you choose to have an in-house bookkeeping department or are thinking of outsourcing bookkeeping, it’s important because it allows you to keep constant track of critical financial data and run your business as smoothly as possible by organizing its finances and managing its everyday operations.
Both small and large-scale businesses employ bookkeeping methods to reach greater heights and improve their chances of expanding in the future. Bookkeeping is done through the manual or automated record-keeping of a company’s cash flow, financial transactions, assets, debts, merchandising, and tax preparation.
However, these tasks can become challenging when you, as a business owner, are unsure between choosing in-house or outsourced bookkeeping. This increases the need to be mindful of a few factors to consider when making such a decision.
Here’s a detailed comparative analysis between in-house and outsourcing bookkeeping to help you make a better choice.
Quality and Bookkeeping Training
Sometimes business are confused between hiring an in-house department or outsourcing bookkeeping tasks when they aren’t sure of the quality of services they’re looking for. Regardless of what you choose, you’re likely to experience a different quality of work from each of them.
Hiring an in-house financial management department to manage your company’s bookkeeping won’t only be an exhausting task, but you’ll have to provide them with the resources and training needed to meet your bookkeeping expectations. In-house departments consist of both beginners and experienced professionals who may take additional time to settle into your company and get a hold of your bookkeeping requirements.
On the other hand, this is not something to worry about when you’re outsourcing your bookkeeping. It’s because outsourced companies consist of highly trained and experienced professionals who understand the need for effective bookkeeping in various industries. As a result, they’re likely to initiate the tasks immediately and report the deliverables either within or before the desired deadlines.
The Risk of Fraud and Inaccuracy
Efficient bookkeeping requires companies to have adequate internal controls that ensure accuracy, punctuality, and a steady flow of information without jeopardizing their financial safety and organizational security. The last thing you want is to get ripped off due to choosing the wrong outsourcing options.
While in-house bookkeeping may help you keep an eye on your company’s financial record-keeping, it can’t necessarily guarantee 100% safety. In other words, when one or more employees or team members are reviewing your business’s financial documents to record them into specific categories, there’s a significantly high risk of fraud involved in this process, especially if proper internal controls aren’t implemented.
Outsourcing bookkeeping doesn’t come with such risks. In fact, an outsourced team of bookkeeping experts will guarantee a high-security protocol with at least two pairs of eyes on each process of financial documentation and reporting for your company. This way, you never have to fear financial losses, data intrusion, or fraudulent activity in your bookkeeping operations.
The Financial Reporting Procedure
Financial reporting varies according to your industry and the nature of your business. However, it continues to be an essential aspect of financial bookkeeping in all businesses. Choosing an in-house department might not get you the financial reports as punctually as you need them to be. This often happens when internal departments are handling multiple other financial management responsibilities simultaneously.
However, when you’re outsourcing bookkeeping, you get on-time and accurate financial resorts every week or month based on what is committed to you. It’s because these companies don’t have any other responsibilities than handling your bookkeeping operations and prioritizing your financial management needs.
The Costs of Services
Your budget and affordability is a significant factor that can decide whether it’s a good idea for you to choose an in-house department or outsource your bookkeeping. The cost of each of these bookkeeping approaches significantly differs from one another.
Hiring an in-house department is a more expensive option, especially because it requires you to hire a new team of employees and pay their monthly services, regardless of how they’re performing your bookkeeping tasks. However, if you have a limited amount of funds to spare on such processes, outsourcing bookkeeping might be a better choice for you.
It’s because outsourcing requires you to pay a one-time fee for bookkeeping services instead of bearing such an expense every month. This is a seamless, more efficient, and affordable solution for anyone seeking high-quality bookkeeping services on a limited budget.
Long and Short-Term Business Growth
What you choose for your business should be directly connected with your business’s long and short-term growth. If you think an in-house department will take your business to greater heights in the future, you can always invest in it.
However, when you’re looking to avoid risks and guarantee both long and short-term business growth and expansion, outsourcing bookkeeping might be the best course of action.
Choosing Between In-House and Outsourced Bookkeeping
Now that you know the key differences between in-house and outsourced bookkeeping, you may be wondering which one is the right fit for you. Choosing between either of these things depends on your company’s scale, financial management needs, cash flow, capital, and most of all, the ability to control risks.
An in-house department might be the right option for you if you’re willing to take some risks and have the resources to hire a qualified staff for effective financial management. However, outsourcing bookkeeping will always offer exceptional results along with minimized risks.
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