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Getting Started with Outsourcing
Over the last ten years, outsourcing has grown in popularity. The term “outsourcing” means giving work to a third-party vendor on a contractual basis. As in: do you have tasks you don’t particularly like to do? Or want to leverage your time? Both of these would be great opportunities for outsourcing. We like to think of it like cleaning the gutters: we could climb up on a ladder and spend the better part of a Sunday clearing away last years debris, but why not call in the professional to save time and avoid potential disaster? In our personal lives we often have no problem outsourcing work we don’t have time for or we’re just not good at: cleaning house, dry cleaning, dog grooming, landscaping, car washing, and even our personal financials. So wouldn’t it seem like a good idea to do this for our business?
WHY Should I Outsource?
We know why we hire people in other areas of our lives, but for business, we call it “getting out of our own way”. Let’s take bookkeeping: do you really enjoy all that recordkeeping and numbers corralling? Are you an expert? If the answer is no – then you’re on the right track. There are big benefits of outsourcing to your business, including these added bonuses:
- Access to Experts
- Increased Efficiency
- Time to Spend ON Your Business
So let’s look back to outsourcing your financials; in our article Business 101: Benefits of Outsourcing your Accounting, we discuss the why you’d want to outsource your accounting, and how that can help elevate your business. By outsourcing your financials to a bookkeeping team, you’re also adding a few bonuses to that list above:
- Better Risk Management
- Strategic Cash Planning
- Security and Trust
WHEN Do I Outsource?
There are growing pains that happen at different stages of your business. We find that we most often recommend outsourcing when we hear the number one pain point: I no longer have the time to spend ON my business. It might be time to look at outsourcing if you are also struggling to find time for:
- Personal downtime
- Technology Upgrades
- Paperwork (including your data entry and recordkeeping!)
WHO Do I Outsource to?
The #1 value of The ADI Team is security. We talk the talk and walk the walk, but it was a struggle for us. We completely understand that letting go of financial tasks in particular can bring up some issues for business owners. We have a few articles you might want to review before building any part of your team, starting with Securing Your Bookkeeping System. We also know that choosing a trusted person can be daunting. For that, we’ve written quite a few articles, but our favorite is Five Warning Signs Your Bookkeeper isn’t for You.
At this point, you might be asking yourself: wouldn’t it be cheaper to hire an employee? If you are willing to supply all the material, tools, training, and processes which will give you ultimate control, then yes, an employee relationship may be right for you. However, most business owners look at outsourcing because they lack the time to work on their business and already do not have additional time to onboard, train, and manage an employee. There’s also the other side of the coin: with an employee, you have a set amount of hours to provide, payroll expenses, and benefits to cover. With a contractor, you can hire for the exact amount of hours you need; and you can start low (like 10 hours a month) and build up as your business grows. In the article Growing Your Team : Employee vs. Contractor, we cover the basic differences between employee and contractors and provide a variety of resources.
Above we mentioned that outsourcing is contracting with a third-party vendor. A contractor comes to you with a solution, provides their own processes and tools, and if you choose to hire a consultant that is an expert in their field, they WILL save you time.
What Is the Difference between a single bookkeeping or a team?
The answer to this question depends on the contractor you are hiring and the tasks you will be outsourcing. Will you look to outsource just the recordkeeping (data entry)? Or all of your bookkeeping? Or maybe you want a profit consultant to work with you on budgeting and growth? Finally, does your tax professional fit into this ultimate outsourced financial team? In Terminology 411: Bookkeeper, Accountant, Tax Professional, we define the basic roles of a financial team.
We also have two ebooks to help you design
this dream team of financial experts:
Both of these are great resources for helping you decide what you need for the size of your company, the when and who of your financial team, and how to go about getting them set up.
HOW Do I Outsource?
Now that you have a better idea of the “who” you are choosing to bring on to build your team and the roles they will fill, now it’s time to outsource. But where do you start?
For outsourcing your accounting, the first step is to look at the tools you will use to “share” your data. The ADI Accounting Team recommends using a browser based solution with paperless storage options. We personally use Xero and QBO as our company accounting tools, as they allow business owners freedom to move about in the world.
The second step is to develop a clear communication plan and process. This is essential in the start-up phase and will help you establish a deeper trust factor that is needed to create a long-term relationship.
While you don’t need to know how your bookkeeping team will accomplish tasks in full detail, you do need a clear understanding of the process.
Identify the Following
What tasks will be outsourced?
- Paying bills
- Client invoicing
- Bank reconciliation, review and reports
- Profit analysis and growth
- Info tax processing – 1099, personal property
- Data management
Who will handle what task?
- Outline the approval process
- Responsible parties
- Communication needed to start or finish the task
When does the task need to be done?
- Pay bills weekly or twice a month
- Invoice the client no later than the 5th
- Financial review by the 15th
If you’re new at outsourcing, we always recommend to start small and build up your team. Maybe in the next quarter you want to bring on two new experts: a bookkeeping team and a secretarial service. Great! We recommend you stagger the onboarding and learn from each process as you move forward and grow your business.
The ADI team is made up of a mix of employees and contractors. Since we love the world of outsourcing, we would love to help you get started.
Let us help figure out how to best meet your business financial needs.
Get the ADI Accounting Team’s Cover Your Financial Butt Checklist!