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Increase Your Business Success - Use Outsourced Accounting & Bookkeeping Services
By Richard J. Muscio
The following two tables from The Small Business Book (Robert Hamilton and John English) make the point eloquently.
Survival Related to frequency of reports
Frequency Survival Rate %
At least monthly 79.7
Quaterly 71.5
Half -yearly 49.9
Annually 36.0
Survival in relation to records
Accounting Records Survival Rate %
Excellent - good 63.0
Average 49.8
Inadequate 20.1
Poor - non existent 2.5
As one can see the difference between average and good can make a 25% difference in business survival.
Until recently small businesses could not afford best or bookkeeping services. Small companies had to rely on part-time bookkeeping services, with no guarantee that the person will be available when needed. Part-time bookkeeping or service providers cannot provide the diversity of and bookkeeping experience needed.
Even for larger companies, there is a shortage of accountants. The number of graduates is down 25% and the number of CPA candidates is down 22%. Since the need for expertise is going up and the supply is down, the salaries for US accountants are increasing faster than inflation.
Companies like General Electric pioneered outsourced and bookkeeping services. Many large companies have followed suit. Typically they have created captive operations with at least 300+ employees.
There is now a new class of vendors (primarily from India) who provide outsourced and
bookkeeping services to clients who may need only a quarter-time accountant to clients needing three hundred accountants.
Outsourced and bookkeeping service firms have several advantages:
1. They can train their staff consistently in accounting, bookkeeping, or tax return preparation.
2. They are much less vulnerable in case of employee absences, illnesses etc.
3. The outsourced and bookkeeping service firms have to invest in quality control to retain clients.
4. For one price the customer receives a bundle of necessary skills, all the way from clerical level to controller level.
Outsourced and bookkeeping service firms provide:
1. Flexibility in manpower requirement – one can buy only the required services from outsourced and bookkeeping service firms.
2. The client is relieved of the need to hire, train, and manage staff.
3. The client is also relieved of rent, computers etc.
4. Considerable cost-savings. Outsourced or bookkeeping services cost as little as 1/3rd. the cost of comparable US resources.
One of the arguments against using outsourced and bookkeeping services is security or loss of control of data. Outsourced and bookkeeping services firms spend considerable time and energy to keep their data secure.
To summarize, use of outsourced and bookkeeping services, can give the business owner a key tool that he can use to get timely, actionable information. It raises the probability of success at an affordable price.
Dev Purkayastha (CEO, Indevia Accounting, Inc.) holds an M.B.A. from Harvard Business School and is a qualified Chartered Accountant. In addition to his accounting experience, he has over 25 years of experience in the venture capital business as well as in investing in public enterprises. For more information on outsource accounting & bookkeeping services please vis