Smart Business Magazine, April 2020

56 Smart Business April 2020 A smart investment Have you thought about outsourcing your accounting functions Theres been an explosion of outsourced accounting says Matthew Long CPA principal and director of Client Advisory Services at Rea Associates The driver behind it all Technology Artificial intelligence machine learning and automation do the heavy lifting with manual data entry and transactional work so internal accounting is more about managing exceptions and outliers Businesses of all sizes are outsourcing Long says Its become a trend the past five years even though large corporations do it on a different scale and in a different way than mom and pop shops A large corporation might outsource its transaction level work so an accounting department or CFO can focus on analysis A small or midsized business may outsource all accounting where the transactional piece is all to get good data and controller CFO level service from the outside provider Smart Business spoke with Long about the benefits of outsourced accounting functions Why would you outsource your accounting The most valuable reason to outsource is to automate your systems and transactions which helps you get information quicker The financial data isnt historical where its 30 days before you see results You go from keeping score and doing accounting functions because you need to maintain a set of books for a tax return or because the bank requires it to maintaining a set of books so that you can use it as a tool to analyze data You can move rapidly as the business environment changes Other times its a cost cutting exercise If a full time person fills his or her day with tasks that arent accounting related to keep busy it may not be worth having a fixed cost associated with it The outsourced provider often uses a more deliberate and efficient process so that firm is able to do the work quicker and or cheaper By outsourcing you obviously get an accounting professional but you also get a team You dont rely on one person where youre scrambling if that person gets sick or leaves It helps from a planning standpoint too The labor market is competitive and you dont have to compete to find talented people Whats an example of improved efficiency With accounts payable historically a clerk opens the mail reviews the invoice and signs off that its accurate Then someone else enters it into the accounting system Thirty days go by and an employee cuts a physical check compares it to the invoice signs it stuffs an envelope and mails it Now with technology your vendor sends the bill directly to a dedicated accounts payable email address and software in the background reads that invoice It picks out the vendor name address due date dollar amount etc to code and save it for the system An employee reviews the information electronically and clicks a button file and pay When the invoice is due the payment is sent electronically with the invoice attached to the ACH or wire transfer Again a set of eyes looks at it and says Yes thats accurate How can companies determine if outsourcing make sense for them Some outsourced accounting practices have an all or nothing approach Others take a tailored approach Youll need to consider what components you want to continue to do in house because its easier less back and forth cheaper etc Questions to ask are How are you doing your accounting How often are the decision makers controller CFO business owner or COO looking at the financials How soon are those financials presented Could time be better spent Or are there things that youd like from a financial reporting aspect that youre not getting Custom dashboards can go beyond the raw numbers You can analyze customers sale trends or inventory It comes down to what are you trying to accomplish but it doesnt happen overnight It takes time to evaluate the current system and processes and put together the best technology stack or solution Then the outsourced firm can help implement and integrate the team into it It can be intimidating but you dont have to go from where youre at now to the best It can be gradual because change is never easy Ultimately you want to put systems in place and revamp your processes in order to scale grow and focus on profitability cash flows or whatever is most important to you MATTHEW LONG CPA Principal Director of Client Advisory Services Rea Associates 234 249 3468 matthew long@ reacpa com Insights Accounting is brought to you by Rea Associates PODCAST To learn more about how outsourced accounting can grow your business listen to Reas podcast at www reacpa com episode 206 INTERVIEWED BY JAYNE GEST INSIGHTS ACCOUNTING