Good bookkeeping is an essential component of every successful business – big or small. Every piece of financial data in your business flows from your bookkeeping. If you’re not confident in your bookkeeping process, you can’t be confident in any of your numbers: a nightmare scenario for any business.
By embracing a more robust approach to bookkeeping, business leaders can gain increased confidence in the accuracy of their accounting records. That has all kinds of benefits, allowing leaders to better manage cash flow, allocate resources, and ensure their business can continue to meet its financial commitments.
The importance of bookkeeping is widely accepted but it’s a task that is often overlooked by many different kinds of businesses: particularly early-stage start-ups and technology businesses. It’s easy (and common) for founders to prioritize more exciting, important tasks like working on product strategy or building customer relationships over bookkeeping.
But while it’s true that bookkeeping can be time-consuming and monotonous, it’s equally true that it’s a task that’s vital to the long-term success of your business.
Here’s the good news: you don’t have to manage bookkeeping internally. In fact, unless you know what you’re doing, you probably shouldn’t manage bookkeeping internally. In this article, we’ll explore the alternative: outsourced bookkeeping.
Read on to learn exactly what outsourced bookkeepers do and explore the potential benefits your business can realize by outsourcing your bookkeeping needs.
G-Squared Partners provides a range of outsourced accounting services to SaaS and technology businesses, ranging from full-service outsourced bookkeeping to CFO-level strategic guidance. To learn more about how G-Squared Partners can support your accounting and finance needs, schedule a call today.
What Is Outsourced Bookkeeping?
Bookkeeping is the process of maintaining a business’s financial records by recording and tracking all transactions. Bookkeepers summarize this information into reports and financial statements that indicate how the business is performing. It’s worth noting that bookkeeping is different from accounting, which refers to the analysis of these financial records, although there can be some crossover.
Many bookkeepers also support businesses by completing other basic financial tasks, such as sending invoices, running payroll, and more.
When a business outsources bookkeeping, it transfers responsibility for some or all bookkeeping tasks to an external party, typically an outsourced bookkeeping firm. The outsourced bookkeeping provider will take over the management of all day-to-day bookkeeping tasks and provide routine reports on the financial performance of the business.
Outsourced Bookkeeping Tasks
Depending on the needs of your business, an outsourced bookkeeper can handle all kinds of finance and accounting tasks. As you evaluate potential outsourced bookkeeping partners, prioritize those that allow you to design a bespoke relationship based on the needs of your business, rather than a rigid checklist of deliverables.
Typical bookkeeping tasks that can be outsourced include:
- Data entry
- Reconciling bank accounts
- Producing monthly reports and financial statements
- Managing accounts receivable & accounts payable
- Running payroll
- Other tasks including sending and paying invoices, gathering information for tax filings, and more
Practically any bookkeeping task that’s handled in-house can often be outsourced. In most instances, outsourcing your business’s bookkeeping gives you access to more timely, more accurate financial information at a fraction of the cost of staffing an internal bookkeeping team. Let’s take a look at why that’s the case.
Hiring In-House Bookkeeper vs. Outsourced Bookkeeping
Early in their journey, many startups choose to handle their bookkeeping in-house. When the business has few transactions and little revenue, this is manageable and allows founders to minimize their costs.
However, once a business starts to gain traction, it’s often the case that the leadership team should re-evaluate their approach to accounting and bookkeeping. What works when revenue is $1,000 a month won’t work when revenue is $100,000 a month: systems break, errors pile up, and founders become more and more uncertain about their business’s true financial position.
To address these issues, leaders have two options: hiring an in-house bookkeeper or outsourcing bookkeeping to a third-party vendor. Here are the advantages and disadvantages of each of these approaches.
Hiring an In-House Bookkeeper: Key Considerations
An in-house bookkeeper is an employee of your business: an individual who works, either part-time or full-time, on your bookkeeping. Traditionally, this has been the route that many businesses have followed, but today, many businesses, particularly VC-backed startups, are opting for outsourced bookkeepers instead.
While hiring an in-house bookkeeper gives you an employee who is solely focused on your business’s bookkeeping, there are a few complications to consider. Your leadership team will need to spend a significant amount of time recruiting, onboarding, and managing your new bookkeeper. You’ll have to provide them with the resources they need to be successful, provide ongoing training, and pay for their salary and other benefits.
It’s an approach that can work for some companies, but with the developments in accounting technologies and the emergence of outsourced accounting services, outsourced bookkeeping often represents a better alternative.
Hiring an Outsourced Bookkeeper: Key Considerations
By hiring an outsourced bookkeeper, business owners essentially transfer responsibility for their monthly accounting and bookkeeping tasks to a team of external experts. Outsourced bookkeeping providers use proven processes and accounting software to deliver a higher caliber of bookkeeping. For business leaders, that means access to precise financial information that’s constantly updated in real-time.
Additionally, outsourced bookkeeping firms typically offer their services on a fractional basis that scales with your business’s needs. That’s a perfect match for fast-growing SaaS and technology firms that need to build out a financial infrastructure that can handle rapid business growth.
Once your business reaches a certain point, it might make sense to bring your accounting and bookkeeping tasks in-house. But when you’re busy scaling your business, outsourcing represents the perfect solution, ensuring leaders have access to detailed financial information without any of the overhead of staffing an internal accounting and finance department.
Outsourced Bookkeeping with G-Squared Partners
Partnering with the right outsourced bookkeeping service can be transformative for SaaS businesses, enabling leaders to benefit from access to high-quality financial record-keeping at a fraction of the cost of a more traditional in-house approach.
One thing entrepreneurs shouldn’t overlook is the importance of finding an outsourced bookkeeping vendor that’s a good fit for their business. SaaS and technology businesses, in particular, operate very differently from traditional companies. Effective bookkeeping demands knowledge of these business models and experience building the financial systems required to support rapidly-scaling businesses.
At G-Squared Partners, we specialize in providing outsourced bookkeeping, accounting, and CFO services to SaaS and technology businesses.
With a proven track record supporting over 100 leading SaaS businesses and a leadership team with experience leading finance at publicly traded SaaS companies, we’re uniquely positioned to help technology businesses excel.
Learn more by checking out our Ultimate Guide to SaaS Business Accounting or by contacting us today.