Good accounting and bookkeeping services can considerably increase the likelihood of business success.
The following two tables from The Small Business Book (Robert Hamilton and John English) make the point eloquently.
Survival Related To frequency of accounting Report
Frequency Survival Rate %
At Last month – 79
Quarterly – 71.5
Half-yearly – 49.9
Annually – 36.0
Survival in relation to accounting records
Accounting Records Survival Rate %
Excellent –good — 63.0
Average — 49.8
Inadequate — 20.1
Poor – non existent — 2.5
As one can see the difference between average and good accounting can make a 25% difference in business survival.
Until recently small businesses could not afford best accounting or bookkeeping services. Small companies had to rely on part-time bookkeeping services, with no guarantee that the person will be available when needed. Part-time bookkeeping or accounting service providers cannot provide the diversity of accounting and bookkeeping experience needed.
Even for larger companies, there is a shortage of accountants. The number of accounting graduates is down 25% and the number of CPA candidates is down 22%. Since the need for accounting expertise is going up and the supply is down, the salaries for US accountants are increasing faster than inflation.
Companies like General Electric pioneered outsourced accounting and bookkeeping services. Many large companies have followed suit. Typically they have created captive operations with at least 300+ employees.
There is now a new class of vendors (primarily from India) who provide outsourced accounting and bookkeeping services to clients who may need only a quarter-time accountant to clients needing three hundred accountants.
Outsourced accounting and bookkeeping service firms have several advantages:
1. They can train their staff consistently in accounting, bookkeeping, or tax return preparation.
2. They are much less vulnerable in case of employee absences, illnesses etc.
3. The outsourced accounting and bookkeeping service firms have to invest in quality control to retain clients.
4. For one price the customer receives a bundle of necessary skills, all the way from clerical level to controller level.
Outsourced accounting and bookkeeping service firms provide:
1. Flexibility in manpower requirement – one can buy only the required services from outsourced accounting and bookkeeping service firms.
2. The client is relieved of the need to hire, train, and manages staff.
3. The client is also relieved of rent, computers etc.
4. Considerable cost-savings. Outsourced accounting or bookkeeping services cost as little as 1/3rd. the cost of comparable US resources.
One of the arguments against using Outsourced accounting and bookkeeping services is security or loss of control of data. Outsourced accounting and bookkeeping services firms spend considerable time and energy to keep their data secure.
To summarize, use of outsourced accounting and bookkeeping services, can give the business owner a key tool that he can use to get timely, actionable information. It raises the probability of success at an affordable price.