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Do You Need an Outsourced Accounting Partner? – hands pointing at charts, pc, and tablet – Redpath

What You Should Know Before Hiring an Outsourced Accounting Partner

by Redpath and Company

Sometimes, it's clear to business owners that they need accounting help. Maybe their accounting staff is overworked, deadlines are being missed, or opportunities are passing them by. But other times, business owners find themselves asking whether or not they should hire an outsourced accounting partner.

It's not black-and-white, either. Maybe you need a part-time CPA; maybe you need someone to take a bigger role. The first step to knowing what kind of provider you need is finding out where you need the most help.

Signs You Might Need to Outsource Your Accounting to a CPA Partner

Companies might not be sure whether or not they need to enlist external help to manage their accounting work. Melissa Orth, client accounting services manager with Redpath, has had the outsourcing conversation with countless companies, and she recommends asking these questions to decide whether or not you need external accounting help:

  • How long is it taking to close each month? When leadership receives news or reports, are they timely or always a bit behind? Are you consistently behind on payables?
  • Is one person taking on multiple roles? Controllers, bookkeepers, accountants, and CPAs specialize in different skills in the broader accounting field. One or two people filling all of those roles can be a sign that they're underprepared and understaffed.
  • What's their workload like? How consistent is their workload? Is the latter half of every month quiet, or is it steady?

Melissa is quick to point out that none of these factors is necessarily an indictment of your team's accounting skills. Rather, the reality for most companies is that there just isn't enough time or people-power to give their accounting the attention it needs.

With so much else to manage, Melissa advises, "business owners usually aren't in the nitty-gritty, working in the trenches of their finances. Even if they are, they might not have the expertise or mindset to find the red flags, improve processes, and plan for their financial future."

Hiring external accounting help is a move to consider in anticipation of growth or change in the company. "If you're looking to grow revenue, add people or facilities, or expand to other states, you'll need to put more attention toward your accounting," Melissa says. No matter what your accounting looks like, whether it comprises discrete accounting roles or a catchall controller, your business needs to be able to support its goals from a financial perspective.

The Pros and Cons of Outsourcing Your Accounting

While the benefits of hiring an accounting partner are fairly clear-cut, it often helps to create a list of pros and cons when deciding if a CPA partner is right for your business. Here are a few of Melissa's go-to considerations:

  • An accounting partner can cost more up-front. Cost is the factor most companies consider first. While hiring an external accounting partner is an added expense, it's also an investment in your company’s short- and long-term financial health – as well as accurate financial reporting, new tax benefit opportunities, and anticipating regulatory issues before they cripple your company. "You're also not responsible for the other costs associated with hiring a new employee," Melissa adds, "like health insurance, 401k, and other benefits."
  • An accounting partner can be full-time or part-time. The right accounting firm will be able to prioritize their work to give you the most value from your engagement, whether it's full-time, part-time, or a combination of the two.
  • An accounting partner can match the needs of your company one-to-one. Every company's accounting needs are different. Outsourced CPA firms can match your pressing issues to a team specializing in your industry and market to move you closer to your goals.
  • You'll need to communicate more with your accounting teams. Of course, bringing more people into the financial fold means keeping more people informed. But Melissa says Redpath's dedicated account managers adapt their communication patterns to fit each company's needs and bandwidth. "We'll walk through communication with clients if we need to," she says. "We never make assumptions, and we cater to our clients in what they need, whether that's more calls or fewer."
  • You'd be sharing a degree of control. Depending on leadership structure, companies can see sharing their load with an external partner as a benefit or a liability. Maybe you're more hands-on, or maybe you'd rather leave it to the pros – a partner can find the right level of influence from both sides. It all comes down to knowing that your finances are in good hands with people you can trust.
  • Working with an accounting partner creates more accountability. By separating roles and putting the right people in them, outsourcing your accounting naturally creates more discrete responsibilities. That means greater visibility into your accounting processes, pain points, and opportunities you may not have discovered with an understaffed accounting department.

Whether or not you need outsourced accounting help will depend on what your finances look like today, who's managing them, and where you'd like to take them in the future. A dedicated CPA partner can help bring your finances under control to help your company realize the larger financial picture.

Business Valuation

Redpath and Company

Redpath and Company

Redpath helps clients make more informed decisions that contribute to their financial well-being by providing proactive, innovative, and value-driven certified public accounting services for closely-held businesses, government entities, and not-for-profit organizations. Areas of service expertise include audit and attest; personal, business, and international tax; accounting services; entity structuring; mergers and acquisitions; valuations; succession and estate planning; state and local tax; and sales and use tax. The firm was founded in 1971 and is 100% employee owned (ESOP). With offices located in downtown St. Paul and White Bear Lake, Minnesota, the firm ranks as one of the top CPA firms in the Twin Cities with over 180 employees. Redpath is a member of HLB International, a global network of independent advisory and accounting firms. For more information, visit redpathcpas.com.