Pitfalls Of Outsourcing Accounting

Outsourcing of accounting and bookkeeping has potential problems that can impact the service

. Most vendors won't discuss these items openly, but if a potential client isn't knowledgeable about the pitfalls, then they can't help avoiding them.

From our experience, the major accounting outsourcing problems are scanning of accounting documents, personal communication, tax requirements, and the important issue of securing data and privacy issues.

Scanning is difficult. Many small businesses do not have a proper way to store the bills, receipts, and invoices and they don't generally keep them in order. Scanning of them is a mundane and time consuming task. Only the most sophisticated scanners are adequate to scan multiple, different sized documents. However, Secure File Transfer allows us to sort through the scattered data and provides us with an input document in .xls or wk.123.

Communication is key. Outsourcing is anti-communication. Most accountants are difficult to communicate with under the best of circumstances. They don't return calls, don't allow access to a cell phone, do not respond to emails. And are obtuse in explaining the status of work in progress. Even when the emails are replied, they often don't answer questions properly and it is annoying to work with a non-communicative team clear across the country.

Lack of knowledge is an unfortunate by-product. There seems to be a distinct lack of understanding of how accounting works. This is true, not only of the client, but of the provider. Accounting is simply the recording of financial transactions in a logical way which facilitates the business owner's ability to manage, define and expand the entity's product line. Accounting should give the business the information it needs, not satisfy the accountant's needs or desires.

Security is paramount in online data transfer. There is an excellent chance that your receipts, invoices, and other important financial data is stuffed in a filing cabinet or in a desk drawer. Included with our service is the benefit of having secure off-site file backup and storage. Why, you may ask? Well, no one can say what will happen tomorrow so the possibility of catastrophic loss could be right around the corner and you need to be ready to withstand the havoc it would unleash on your business. Did you know that 50% or more of business owners that fall victim to theft, fire, or natural disasters are likely to fail or claim bankruptcy within the first year thereafter? Businesses are very concerned about the protection of data and privacy, even from employees, of sensitive financial information. We don't want to expose ourselves and our clients to this vulnerability. It is too much of a risk. Being an accounting firm, we have built a trustworthy reputation and don't want to expose our clients and their details to public or governmental scrutiny.

These are the important issues that need to be addressed when considering outsourcing of your accounting, bookkeeping and payroll needs. We in Virtual Accounting Online, believe by careful planning with our clients, most potential problems can be prevented.

by: Victor J. Quinn

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