How Outsourcing Bookkeeping Can Improve Your Cash Flow
There’s no denying that accounting is one of the most crucial parts of running a business. However, it can also be particularly time-consuming, particularly for those without a strong handle on how to manage the books. According to a survey by the National Small Business Association (NSBA), nearly half of entrepreneurs say they spend over 80 hours a year on basic accounting, with 20% saying that 120+ hours of their time go to federal taxes alone.
However, despite how big of a burden and time commitment accounting and bookkeeping are for business owners, it can feel like outsourcing those operations is counter-productive if you’re looking to improve your cash flow. After all, your business will be taking on an additional expense for something that could technically be done in-house.
Here’s the thing: While outsourcing your bookkeeping and accounting activities is an investment, it could also set you up for stronger cash flow and financial health in the long run. Here are a few of the ways that working with an accountant or bookkeeper can boost your business’s cash flow over time.
Gives you more free time.
As highlighted by the NSBA survey results above, accounting and bookkeeping is hardly a small task when you look at the amount of time that business owners spend on it throughout the year. Between taxes, invoicing, payroll, receipt management, and other day-to-day accounting functions, business owners spend a good chunk of their time tackling accounting tasks. For those without the required knowledge or expertise, there’s also plenty of time that needs to be spent on learning the ins and outs of accounting in order to manage everything properly.
All of that time spent on accounting is essentially time away from other business functions, including revenue-generating activities. By outsourcing your accounting and bookkeeping, you can reclaim that time to invest it back into business activities that are more directly related to increasing your revenue, including implementing new operating processes, engaging with customers or clients, and improving your products or services.
Accurate insights into business finances.
Trying to keep your business finances organized and knowledgeable about your money can be a pain, especially if bookkeeping is outside of your expertise. By working with an outsourced bookkeeper, not only can you allow yourself more peace of mind as a business owner, but you can also ensure that you’re getting more reliable insights into your business performance. By regularly monitoring your business transactions, tracking expenses, and looking at your income month-over-month, skilled bookkeepers can give you a accurate financial picture of your business overall as well as provide insightful knowledge regarding the financial position of your business. For example, by running monthly financial reports, you might be able to identify a spike in revenue as a result of a specific marketing campaign.
Overall, a bookkeeping expert will reliably and effectively help you grow your business profitably and understand how money is flowing in and out of your business, which in turn allows you to identify opportunities to improve or boost your business processes to drive more revenue.
Essential support at an affordable rate.
Outsourcing bookkeeping can also support better cash flow by providing a cost-effective alternative to hiring an in-house accountant. For starters, you would only be required to pay for the specific services you need on a monthly basis, which creates more flexibility when it comes to delegating the scope of work. Rather than keeping someone on staff year-round, you can work with your external accountant on a monthly and routine that makes sense to your business and pay only for what you need. Additionally, outsourcing eliminates the overhead costs—payroll taxes, benefits, vacation/sick days, retirement plans, etc.—that come with hiring a full-time accountant or bookkeeper. Schedule a consultation to discuss your business needs.