5 steps to choosing an outsourced accounting partner

Know what you’re looking for and where to find it

Choosing the right outsourced accounting partner is crucial to your business’s financial health. Streamline your procurement process with five carefully considered steps.   

Seek (smartly) and you shall find

Relinquishing control and outsourcing your accounting is a big decision. If you’re still weighing up the pros and cons, this article takes you through when (and why) to outsource.

Once you’ve decided to make the move, the next (and most important) step is choosing an accounting services partner. So, how do you choose the right one for your business?

In this article, we cover a thorough 5-step procurement process to ensure you nail your choice:

  1. Know your business requirements and scope of service
  2. Shortlist by assessing against your needs
  3. Do your due diligence
  4. Agree service and pricing structure
  5. Plan for ongoing management

Let’s dive in and get your search underway.

1. Know your business requirements and scope of service

Many outsourcing projects are destined for failure before they’ve begun. Why? Because of unclear requirements and poor scope specification. Start with the end in mind and get clear about your business needs and scope of service before searching for an accounting services provider.

First, consider your current accounting processes and identify the tasks you want to outsource. There will be some non-negotiables (e.g. payroll, superannuation) and some which are up for discussion (e.g. virtual CFO role). Next, identify your current limitations. Perhaps you have some system weaknesses or processes that need to be automated. This will guide a clear scope of work for your accounting services provider.

2. Shortlist by assessing against your needs

With a good understanding of your business needs and scope of work, you can start to shortlist potential partners who have aligned expertise. Needs are nuanced across different industries, so it also pays to choose a partner with relevant industry experience to ensure they’re up to speed on your business and any unique compliance requirements.

When it’s time to start your search, where do you look? First, reach out to your network – e.g. industry colleagues, customers, suppliers, friends and family – to ask if they know or work with a potentially suitable provider. A recommendation from someone you know and trust is often worth its weight in gold.

Next, supplement your list with your own research via Google and review platforms. Target your search by including specific keywords relating to industry, specific technology or areas of specialty.

3. Do your due diligence

With a shortlist of potential candidates that claim to meet your business needs, it’s time to do your due diligence. Factors to assess thoroughly include:

  • Their past performance. Have they successfully supported other businesses in a similar way? Can they demonstrate this with positive reviews, case studies, and happy customers who are willing to refer them?
  • Aligned industry experience. Have they supported other businesses in your industry? Are they across your specific industry needs, best practice, regulations, compliance requirements, and so on?
  • Certification and licences. Are they accredited by professional organisations such as the Association of Chartered Certified Accountants (ACCA) and The Chartered Institute of Management Accountants (CIMA)? Are they certified as a Certified Public Accountant (CPA) or Certified Bookkeeper? These accreditations and certifications ensure a standard of excellence.

Take special care with security

Sharing your sensitive financial information with a third party can lead to data breaches, unauthorised access and compromised confidentiality. So, when completing due diligence, be particularly scrupulous about your potential partner’s security systems and processes.

Here are some good security questions to ask:

  • Do you have any risk management policies?
  • What physical security measures do you have in place?
  • What encryption methods do you use?
  • How do you manage cloud access for staff outside your network infrastructure?
  • Will our data always be available to me?
  • What happens to our files once you’ve finished using them?
  • What are your policies in the event of a breach?

4. Agree service and pricing structure

With the most suitable providers identified, it’s time to collaborate on a service and pricing structure. A few factors to consider:

  • Look for transparent pricing and a willingness to work within your budget. Flexible pricing models are likely to give you the biggest bang for buck and make outsourcing worth your while.
  • Make sure you thoroughly understand the fee structure and check for any additional hidden costs or fees.
  • Make sure your contract terms are clearly documented so you know exactly what you’re getting for how much.
  • Remember that high-quality services often cost more, so make sure you consider cost in a wider context of quality and performance. Sometimes, it pays to pay a little more.
  • Ask if the provider offers a free trial period so you can test the waters before committing.

5. Plan for ongoing management

Finally, put a plan in place for managing your outsourced accounting services, ensuring you evaluate performance and ROI on an ongoing basis. When planning your management, consider:

  • Monitoring of cost, time and complexity saved. Is your provider saving you time, simplifying your accounting and saving you money in resources and technology?
  • Communication and check-ins. Will you have a dedicated point of contact? How will you stay in touch regularly? How will the provider report on progress to ensure continuous improvement? What is the process if an issue needs escalating?
  • Information transfer. How will you share information easily, quickly and safely? What will happen to it once it is no longer needed?
  • Strategic planning. How will you leverage your improved financial intelligence to inform your long-term strategy for improved profitability and growth?

Who is responsible for tax compliance?

When it comes to taxation, your accountant has a duty of care to provide sound professional advice, keep your finances in order, and ensure the management, reporting and payment of your taxes is compliant. Some examples of negligence include incorrectly assessing your tax liability, providing incorrect taxation advice, and failing to identify tax exemptions.
If you receive poor advice which results in financial loss, you may be able to claim compensation with the help of a professional negligence lawyer. Of course, prevention is better than cure so choose your accounting services provider wisely.

Choosing the right accountant is easier with the end in mind

The success (or failure) of outsourcing your accounting depends on choosing the right accounting services provider for your business. It all starts by determining your business objectives, needs and a clear scope of work. Not sure where to start? It pays to get advice from an experienced accountant who can guide you through the process.

Unlock the value of outsourcing with expert accounting advice. 

Ask for a callback from Sheridans.