Small business owners typically have to individually look after every aspect of their business operations, including monetary matters. But managing organizational finances can take up a lot of time and effort. Additionally, any mistakes in the process can lead to inappropriate budgeting and transactions. To avoid such issues, hiring a reliable professional to provide accounting services can be a good idea for small businesses. The professional can offer the expertise required for smooth financial management.
1. Determine key services
Accounting services providers offer assistance for carrying out a wide range of financial processes. So, before hiring a professional, a small business must ascertain which services it needs. The requirements may change based on the industry and the business’s goals. That said, most providers can provide a few basic accounting services.
Bills, collections, and deposit services
Billing processes can be easily streamlined by hiring an accounting service firm. The professionals here can easily handle tasks like entering bills into the accounting software used by the business, setting up digital bill payments, responding to vendor inquiries, and processing employee expenses. Along with this, an accounting service provider can also handle collection calls for due invoices or money owed by others to the business. Once the provider gets the clients to pay, it will also deposit the money in relevant business accounts. This will help the business build a seamless invoice system, lowering the risk of errors and saving precious time and resources the organization may have otherwise spent on bookkeeping.
Sales and invoicing services
An accounting service provider can also help create and deliver invoices to the right customers and clients. Following this, the provider can share details regarding the daily sales records and reconciliations, if any. An accounting service provider can also track the daily sales outstanding (DSO), which is the number of days it takes a business to collect payment for a transaction. This is often considered a major metric for businesses, as when the DSO is high, actions need to be taken to bring it down to avoid any cash flow issues. Accounting service professionals can proactively manage this problem by handling sales and invoices.
Payroll services
Often, businesses spend a lot of time and resources on the payroll process every month. Bringing in an accounting service provider can help ease this process. They will ensure that the job is done accurately and on time. Most accounting service providers assist with a few basic payroll-related tasks.
- Entering or gathering timesheets
- Processing employee payroll
- Uploading reports of third-party payroll
- Allocating the cost of labor by job or customer
Cash flow forecasting
Small businesses may find it tricky to determine time and again whether they have the necessary funds for various tasks, like hiring an additional staff member, investing in marketing, or extending a credit line. What eases the decision-making process is having a snapshot of the overall financial position of the business at different points in time. An accounting service firm can help provide this data with the help of a cash flow forecasting tool. This can help the business make the right decision while managing the cash flow.
Prevention and protection from fraud
A reliable accounting service provider prioritizes safeguarding the confidentiality and security of data. It safeguards financial data by having silos of access for different members of the firm, locking down historical data, reviewing audit trail reports, and ensuring there are no discrepancies in payments. These tasks help prevent fraud and unauthorized data access. So, hiring an accounting service firm may help a small business rest assured that its data is accurate and safe.
Month-end closing and reporting services
Accounting services for small businesses often offer the month-end closing and reporting package. This generally includes services such as preparing tax and auditor-ready documents, profit and loss sheets, balance sheets, accounts payable, accounts receivable, and sales and customer reports. The package may also come with key performance indicators (KPIs), including company scorecards, people scorecards, and so on.
2. Set a budget
Small businesses should prioritize budgeting to avoid overspending. So, even when hiring an accounting service firm, it is important to decide how much the business is willing to spend on such external resources. Based on its requirements, a business can determine if it wants all or only a few of the services provided by the accounting firm, as this can affect the overall cost. Typically, monthly service fees of accounting firms start from $2,000 and go up to $5,000. On average, a small business may spend about $3,500 monthly for external accounting services. Assessing these figures can help the business determine how much it can spend on hiring an accounting services firm.
3. Check the credentials of the professionals
Before hiring a provider that offers accounting services, one should check the credentials of its team of professionals. An accounting service provider needs to have CPAs (certified public accountants) on board, as the certification indicates that the professionals have successfully cleared a relevant exam to receive a permit to practice. CPAs must also keep their licenses active by meeting continuing education requirements. They must also consistently keep track of new updates and changes in federal, state, and local tax laws. Additional certifications to consider include accredited in business valuation (ABV), certified valuation analyst (CVA), and personal finance specialist (PFS).