So you just raised your first round of funding. How do you handle your accounting and finance function? Do it yourself? Hire internally? Find a bookkeeper? Or outsource the function? You may quickly come to the conclusion that at this stage hiring internally is too expensive. And hopefully you will realize that you have better things to do than accounting.
So, what do you do?
Sometimes the most appealing option is hiring a single bookkeeper. At first glance, they seem like the least expensive option with their hourly rates as low as $30 per hour. Many will have most of the experience required for small companies. However, many will not have the necessary degree of expertise and skills required for the preparation of fully GAAP-compliant statements and implementation of audit-ready accounting procedures within a small or medium sized company.
What’s next? A better way than this – outsourced accounting.
Companies do not typically possess the skillset to manage more rigorous accounting platforms, and this is where they can seek to leverage high-quality outsourced accounting relationships.
The delivery of an outsourced accounting solution has also been significantly enhanced with the advent of online platforms for project management, task management and messaging. Venture-backed companies can now leverage expert outsourced providers to implement an enterprise-class accounting system at an early stage, experience minimal additional cost and to eliminate the alternative of significant transition expense further downstream.
In addition, it is a core competency of outsourced providers to preserve up-to-date knowledge of regulatory changes and expertise with technology platforms related to financial accounting processes. Strong providers build a variety of tools into a comprehensive solution, for example integrating Bill.com and Expensify with the NetSuite or QuickBooks accounting suites. Clients can then depend on the rigorous testing and qualification these providers have performed to verify the integrity of the solution.
Outsourcing can also be viewed from the perspective of opportunity cost. It makes very little strategic sense to have a senior member of the founding team tasked with managing the accounting of the company— especially when the risk of misreporting financials and noncompliance with GAAP increases as the activity gets more complex. Setting aside the comparison of simple costs— salary vs outsourced charges—the lost value of having the founding member not focus on product development, team management and customer acquisition is significantly greater.
Outsourced agencies bring the qualified expertise to implement and manage a comprehensive accounting environment almost always at a commensurably lower cost to the company than internal staffing. At tempCFO our clients are not only able to access staff accountant and controller resources but also CFO advisory services, a range of skill-sets that would be very difficult to replicate cost effectively using only internal staffing at early stages.
We know you’ve got a lot on your plate, and outsourcing accounting is a small step to start clearing up the load of work. Let us help, we make sure your hard work accounts for something! 😉