A company has the option to delegate bookkeeping or accounting tasks to an external agent. This move can significantly free up time for the business owners. Nevertheless, caution is advised when opting for this outsourcing route, as it entails sharing sensitive financial information with the external agent. In this blog, we shall see the important questions to ask to choose an accounting and bookkeeping service in India.
Important Questions Asked to Choose an Accounting and Bookkeeping Service
Before a business decides to outsource its bookkeeping or accounting tasks, several crucial factors should be carefully considered and many essential questions to ask to choose an accounting and bookkeeping services are needed. The selected outsourced bookkeepers or accountants must possess qualities such as trustworthiness, competence, and punctuality. Mentioned below are the essential questions to ask to choose an accounting and bookkeeping service:
How a business find out about the size of the outsourcing bookkeeping or accounting service provider?
This is one of the important questions to ask to choose an accounting and bookkeeping service in India. It is essential to determine the size of the outsourcing bookkeeping or accounting service provider. It’s important to know what is the scale of the provider and familiarise with the team to instil trust in the services that they are offering.
Why is it essential for a bookkeeper to be skilled in the field of the business?
A bookkeeper must be knowledgeable in the specific industry of the business. Different industries have a variety of their bookkeeping requirements, with some needing only a few accounts and others demanding more complex financial records. Opting for an outsourcing service provider with prior experience in the same industry ensures that the books will be maintained accurately.
What role does experience of the service provider play for outsourcing bookkeeping and accounting services?
Another one of the essential questions to ask to choose an accounting and bookkeeping service is the level of experience held by the service provider. The provider must demonstrate a record of having accurately maintained accounts and promptly rectifying any errors. This experience is crucial for ensuring the precise upkeep of financial records.
What should a business inquire regarding the qualifications of the outsourcing service provider?
While bookkeeping may not require specialised skills, a bookkeeper should possess a thorough understanding of accounts, journal entries, and ledger management. When it comes to accounting, qualifications become more critical. Therefore, it’s important for the business to verify stated qualifications of the said service provider to ensure expertise in his field.
Why is it important for the business owner to understand the software utilised by the outsourced service provider?
Bookkeepers and accountants typically rely on accounting and bookkeeping software to improve their processes and this forms a part of important questions to ask to choose an accounting and bookkeeping service. A business owner should be aware of the software utilised by the outsourcing service provider. This knowledge facilitates a smooth collaboration, as modern software can automate client accounts and simplify the bookkeeping and accounting processes.
What aspects of delivery and response time should the business consider when outsourcing bookkeeping or accounting services?
The timeliness of service delivery and response is a crucial aspect when outsourcing bookkeeping or accounting. The business should inquire about when they can expect to receive reports and whether the provider can offer regular summaries of accounts on a weekly or monthly basis. Additionally, the expected response time for addressing corrections, questions, or queries should be considered.
How should the outsourcing service provider stay informed about industry trends and policy changes?
The outsourcing service provider must stay current with industry trends, technological advancements, and policy changes that could impact the business. Bookkeepers and accountants should actively incorporate these changes to ensure the accurate maintenance of the business’s financial records. You must include this as one of the vital questions to ask to choose an accounting and bookkeeping service.
What precautions should the outsourcing service provider take to protect the business’s financial data?
As confidential financial information is shared with the bookkeeper or accountant, it is imperative that the outsourcing service provider uses a secure network. They should have a competent and credible team responsible for managing data protection to safeguard sensitive financial data.
What should the business inquire about in terms of payment when selecting an outsourcing service provider?
One of the most essential questions to ask to choose an accounting and bookkeeping service is about payment terms. Different bookkeeping and accounting service providers offer various payment schemes, ranging from hourly rates to monthly charges. The business should inquire about the payment terms and select the outsourcing service provider whose pricing aligns with the business’s needs and budget.
By addressing these questions to ask to choose an accounting and bookkeeping service, a business can make an informed decision when outsourcing its bookkeeping or accounting functions, ultimately ensuring the accurate and efficient management of financial records.
Benefits of Outsourcing Bookkeeping or Accounting Services
After having discussed the questions to ask to choose an accounting and bookkeeping service, let us now see the benefits of bookkeeping services. These include:
Cost-Effectiveness:
Outsourcing bookkeeping presents a very cost-effective solution, as it eliminates the need for hiring full-time employees.
Access to Industry Professionals:
By outsourcing bookkeeping or accounting services, a business gains access to experienced and knowledgeable industry professionals, enhancing the quality of financial management.
Increased Focus on Goals:
Outsourcing allows the business to allocate more time and focus towards its core goals and operations, leveraging the expertise of skilled bookkeepers and accountants.
Informed Decision-Making:
With the guidance of experienced professionals from outsourcing firms, businesses can make informed decisions and formulate effective policies, leveraging their financial expertise.
Accurate Books of Account:
Outsourcing bookkeeping and/or accounting ensures the maintenance of proper and accurate books of account, as reputable outsourcing service providers are reliable and experienced in this domain.
Disadvantages of Outsourcing Bookkeeping or Accounting
Just like benefits, there are many disadvantages of accounting and bookkeeping services also, such as:
Lack of Complete Control:
Outsourcing bookkeeping or accounting means the business lacks direct control over the bookkeepers or accountants, as they are not internal employees.
Privacy and Data Security Risks:
Outsourcing poses a risk to data privacy and security, potentially leading to data leaks or unauthorised access to sensitive financial information, necessitating robust measures for data protection.
Communication Challenges:
Communication with outsourced bookkeeping and accounting service providers can be challenging due to physical distance and differing time zones, potentially delaying discussions and appointments related to business financial reports.
Potential Extra Costs:
Failure to have timely discussions about finances with outsourced service providers may result in additional costs for the business, requiring follow-ups and possible revisions, impacting overall expenses.
Outsourcing bookkeeping and accounting present a balance of benefits and disadvantages, prompting businesses to thoroughly assess factors such as the service provider’s knowledge, skills, experience, and associated costs before deciding to outsource. Despite drawbacks, selecting the right service providers can contribute to the development of a profitable business.
Final Thoughts
When considering the outsourcing of bookkeeping or accounting tasks, businesses must carefully weigh several important questions to ask to choose an accounting and bookkeeping service. These considerations, such as the size and industry familiarity of the service provider, their experience and qualifications, the technology they use, and their commitment to data security, all play important roles in the success of this outsourcing venture. Additionally, evaluating the service provider’s delivery times, staying updated on industry trends, and assessing payment terms are essential steps in ensuring the accurate and efficient management of financial records.
Outsourcing offers several benefits, including cost-effectiveness, access to industry professionals, increased focus on core goals, informed decision-making, and accurate books of account. However, it also comes with challenges like a lack of complete control, privacy and data security risks, communication difficulties, and potential extra costs. Therefore, businesses should carefully balance these advantages and drawbacks while selecting the right service providers, ultimately contributing to the growth and profitability of the business.
