The world is becoming more interlinked, and businesses are becoming more complex. With accounting being an essential component of all successful business, Certified Public Accountant (CPA) firms specifically are experiencing growing demand.
To keep up with this rising demand, many CPA firms outsource accounting services to stay competitive and boost their growth.
As per Fact.MR, the Business Process Outsourcing market is expected to grow with a Compound Annual Growth Rate (CAGR) of 8.5% during 2022-2032.
Outsourcing accounting involves co-sourcing with an external accounting firm to oversee the financial operations of your clients. This enables CPA firms to benefit from the experience of accounting professionals without hiring and training their own staff.
Outsourcing accounting services has proven to be a profitable, strategic, and useful tactic for scaling operations, streamlining procedures, and gaining access to elite talent at a reasonable cost.
Here are some points explaining why outsourcing accounting services is a growth engine for CPA firms:
Outsource accounting allows CPA firms to focus on their core services:
By reducing the time and resources spent managing other accounting services in-house, outsourcing accounting allows CPA firms to focus on their core services. CPA firms can outsource complex and time-consuming tasks to accounting professionals who are well-equipped to handle them efficiently.
With these complex accounting tasks outsourced, CPA firms can focus on their core services, such as tax preparation, audit, and advising. They can invest more time and resources into improving these core services, resulting in higher-quality services and greater customer satisfaction. This can lead to more referrals and repeat business, ultimately contributing to the growth of your CPA firm.
By outsourcing bookkeeping and accounting tasks, a CPA firm can free up resources to provide more specialized services such as financial planning or business consulting.
Outsourcing accounting enables CPA firms to scale their operations more efficiently:
As a firm grows, so will its accounting needs. Outsourcing accounting helps CPA firms to scale their operations more efficiently by providing them with greater flexibility in responding to changes in client demand.
For instance, suppose a CPA firm suddenly receives a large number of requests for tax preparation services during the busy tax season. In that case, the firm can immediately hire an outsourced accounting staff to meet the increased demand without investing in new hires, training, or equipment. This allows the CPA firm to maintain quality services while avoiding the overhead costs of hiring and training new staff.
Outsourcing accounting can also help CPA firms in expanding their services into new markets or industries. CPA firms can attract new clients by outsourcing specialized accounting services that they may not have the expertise to provide in-house, such as international tax compliance. This can lead to higher revenue and growth opportunities.
Outsourcing accounting can also provide CPA firms access to cutting-edge technology and accounting software. An outsourced accounting team can use it to streamline accounting tasks, boost accuracy, and provide real-time financial reporting. This can result in increased client efficiency, productivity, and better decision-making.
Outsourcing accounting can help CPA firms to maintain a competitive edge:
Outsourcing accounting can help CPA firms to maintain a competitive edge by providing access to specialized expertise, the latest technology, and cost-effective solutions. By partnering with an outsourced accounting service provider, CPA firms can leverage these advantages to provide a higher quality service to their clients, differentiate themselves from competitors, and stay ahead of the curve in an ever-changing accounting landscape.
Many outsourced accounting firms specialize in certain accounting disciplines, such as tax compliance or forensic accounting, which may not be the primary focus of the CPA firm. By partnering with an outsourced accounting service provider, CPA firms can expand their service offerings without investing in additional staff, training, or equipment. This can allow them to offer a more comprehensive service to their clients, attracting new business and retaining existing clients.
Outsourcing accounting can lead to increased profitability for CPA firms:
Accounting outsourcing can boost CPA firms’ profitability by reducing overhead expenses, enhancing productivity, and increasing revenue opportunities. Outsourcing accounting can assist CPA firms to boost their profitability in the following ways:
1. Reduced Overhead Costs: With outsourcing, CPA firms can avoid the expenses related to recruiting, training, and providing employee benefits. Additionally, outsourcing providers often charge a fixed fee or hourly rate, which makes it easier for CPA firms to budget and manage costs.
As mentioned in Deloitte Global Outsourcing Survey 2020, “What drives the clients’ decisions is cost reduction. If there is no positive cost case, it will not happen. It is always about cost.” – Partner, Law firm, EMEA
2. Improved Efficiency: Outsourcing accounting tasks can improve efficiency and productivity, as outsourced providers are experts in their field and have access to advanced technology and software.
This can help CPA firms reduce the time it takes to complete accounting tasks, improve accuracy, and provide real-time financial reporting to their clients. This improved efficiency can result in cost savings and increased revenue opportunities.
3. Increased Revenue Opportunities: Outsourcing accounting can provide CPA firms with access to specialized expertise and the ability to offer a broader range of services. This can increase revenue opportunities and allow CPA firms to attract new clients and upsell additional services to existing clients.
Additionally, outsourcing providers may have expertise in areas that the CPA firm does not, such as foreign tax compliance or forensic accounting, allowing them to provide a more comprehensive service to their clients.
4. Scalability: Outsourcing accounting tasks can provide CPA firms scalability, which allows them to adjust their services easily based on client demand. This can help CPA firms meet the needs of their clients without having to invest in new staff or equipment, allowing them to avoid overhead costs and maintain profitability.
5. Risk Management: Outsourced accounting service providers can help firms in risk management by providing them with financial data and advice on how to manage potential risks and comply with regulations.
This can help firms to protect their reputation and avoid hefty penalties. Outsourced accounting professionals can also assist firms with auditing and compliance.
They have the knowledge and expertise to ensure that the firm’s financial records comply with all laws and regulations. This can help to protect the firm’s reputation and avoid hefty penalties.
Overall, outsourcing accounting is a growth engine for CPA firms because it allows them to focus on their core services, scale their operations more efficiently, maintain a competitive edge, and increase profitability. By leveraging the expertise and technology of an outsourced accounting team, CPA firms can grow their businesses while offering better value and service to their clients.
But, When All of These Are Possible?
These are only applicable if you choose a reliable outsourcing partner. It is crucial to choose a reputable partner who has a proven track record of providing high-quality and timely accounting services, as well as a commitment to data security. Additionally, they should have a team of highly skilled professionals who are well-versed in accounting practices and are able to handle any challenges that may arise.