Pitfalls to Avoid when Hiring an Outsourced Accounting Firm
By Carolyn Hall and Craig Jackson
Accounting is necessary in any type of business to assess a company’s revenue and resources. In some instances, businesses simply do not have the manpower or ability to conduct their own accounting, thus triggering the search for outsourced accounting services. As a company begins this search for a firm to handle their back office function, there are a few standout pitfalls to avoid.
Lack of transparency
With today’s cloud technology, business owners should have real-time financial data available through the use of online or mobile dashboards. If the accountant handles all financials without the owner’s ability to view transactions, that is a blatant red flag. The accountant’s plan should include setting up the business’ financials in an accounting system that will allow business owners to access data anytime from anywhere. Cash flow management systems such as Bill.com and cloud accounting systems including Intacct and QuickBooks Online, provide owners with complete access to their business data. Document storage is an additional feature in these systems that provides further information beyond the numbers. Examples include contracts, leases and bank statements. Business owners should never be in the dark regarding their financial information so that they are able to make informed decisions.
Loss of financial control
No matter what level of back office support a firm is engaged to perform, the final approval on all accounting transactions should be required by business owners. Technology allows for online authorization of payments and other financial transactions, making the approval process seamless and easy. In addition, it is imperative for businesses to completely maintain financial control over their spending and generation of revenue. Just as importantly, company personnel should have complete access to their financial data at all times. In our experiences, we have encountered businesses who had turned over all of their accounting to an outside provider, losing access and track of the cash flow, only to find out their accountant had been mismanaging the funds. To avoid this situation, it is important for business owners to have regular review meetings with their accountants on the status of the books and to have online access to their accounting data through cloud solutions.
Any sign of accounting personnel not being completely forthcoming and open should be a warning that there is a potential reason for distrust. As many outsourced accounting teams provide advisory services in addition to basic bookkeeping and controllership services, honesty is a key characteristic needed for a successful relationship. To avoid hiring a dishonest service provider, business owners should get a feel for the outsourced accounting team by determining if they are a good fit for the business. It is recommended for companies to follow up with references to validate gut feelings and rest assured that the company is in good hands.
Outdated service providers
Hiring a non-relevant outsourced accountant is not recommended, especially in the fast paced world that exists today. There are constant upgrades to current software and new applications available on a regular basis. Be sure to hire a professional who keeps current with new software and technology, ecommerce website trends, and will bring those solutions to you proactively.
Carolyn Hall is the leader of Wiss’ FWRD, outsourced accounting group. Carolyn has worked with clients in the commercial industries, real estate, and professional services including both law firms and medical practices.
Craig Jackson is a Manager for Tax Services and has 10 years of experience in public accounting with significant background in taxation and financial accounting.