US Accounting

What Businesses Need to Know About Virtual Accounting?

Entrepreneurs and business owners considering contracting with a virtual accounting firm need
real information they can use that informs better decisions. Experts who track these things say
that there are more than 95,000 online searches every month related to bookkeeping in the
United States alone.


This article explains some of the advantages and disadvantages of working with an outsourced
bookkeeping or accounting partner

Is Virtual Accounting a Good Option For Your Business?


Virtual accounting Service, also known as remote Book-keeping, provides numerous benefits for
business of all sizes. Entrepreneurs are often experts when it comes to their products or service.
However, some do not know where to start when it comes to setting up a general ledger, a
single-entry bookkeeping system, or an integrated system that allows automated flow between
all major financial accounting functions. The latter means that business owners can access
inventory, replenishment, accounts payable, accounts receivable and budgeting files via one
application.


Business owners who need a user-friendly solution to monitor financial activities that improves
control while lowering costs often experience the greatest benefits. Beyond gaining tighter
control, advantages include:

Flexibility to Scale


Responding to changes in sales volume, market considerations, and other factors often mean a
business needs to quickly increase or decrease in-house accounting staff. Companies that
experience seasonal workflow changes find that an outsourced accounting team provides an
always-on-demand workforce that solves issues associated with demand fluctuations. This
flexibility means no layoffs during slow periods, which could trigger unemployment claims.
And, no rush to hire additional staff when volume suddenly surges. Furthermore, cloud
bookkeeping and digital record keeping improve accuracy, faster billing, and better cash flow
management.

Digital Record-Keeping Informs Better Decisions


Digital record-keeping and virtual accounting services provide real-time data that informs
better buying, pricing, and replenishment policies. Digital record-keeping literally eliminates
backlog bottlenecks during periods of peak sales volume. Since online bookkeepers provide
state-of-the-art technology that continuously monitors your records for duplicate entries and
other errors, and allows 24/7 access to files from any device, you’ll most likely avoid any costs
associated with updating existing hardware and software

Improve Cash Flow Management with Enhanced Accuracy


Online accounting services deploy the best tools to organize financial transactions. These firms
may specialize in one industry – say, healthcare, retail, or real estate – or they may hire
professionals trained across multiple industries. Finding an outsourcing partner that offers
experienced bookkeepers in your field is critical for success. With advanced technology and an
experienced workforce that knows your specialty, cash flow management improves with
accurate invoices, receipts, and other financial data to drive faster customer payment and
collection. Improved cash flow management also lowers overhead costs and payroll spending.


Reduced Payroll Spend and Other Costs


Many entrepreneurs and small business owners find that an off-site accounting team works
well with a small in-house team. You gain an experienced staff without the expense of
recruiting, hiring, training, and retaining more employees. These web-based firms allow
businesses the flexibility to bring on help when needed and cut back on outside support when
the workload is manageable. Your virtual accounting team may include bookkeepers, CPAs, and
inventory specialists. Or, you may find you only need a bookkeeper to maintain accurate records
that your current CPA or tax professional needs to file tax reports.


Potential disadvantages and How to Avoid Them


Naturally, while there are advantages to outsourcing bookkeeping activities, there may be some
disadvantages you should be aware of. For example, if you do not do your due diligence, you
may partner with a company that does not have experts trained in your industry or niche
market. Hiring a team with limited knowledge about your particular product or service could
potentially create more problems and solutions.
Sometimes, it’s difficult to coordinate some aspects of your business remotely. Inventory
tracking presents a challenge for some businesses. Highly-specialized customer invoicing and
factoring agreements may also require extensive hands-on knowledge or training to make the
partnership work efficiently. Finding the best fit entails carefully considering your business’s
unique workflow. It may be better to maintain an in-house team if coordination will create a
burden for your internal workers.

Finally, while an outsourced bookkeeping service can give you tighter control over cash flow,
you may lose some control. Remember that even though you are handing off the excess – or
maybe even the majority – of your financial management activities, as a business owner, your
company’s financial health is ultimately your responsibility. Finding a partner with a proven
track record, backed by verifiable references, improves peace of mind and ensures you can
monitor your records. If you don’t feel comfortable, continue interviewing candidates

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