Outsourcing bookkeeping is a crucial step businesses take to reduce costs, streamline operations, and access professional help managing finances confidently. However, farming out the bookkeeping functions is also a challenge. You should avoid certain pitfalls when entrusting the bookkeeping services in Severna Park, MD, with your business’s financial record keeping. Let us look at them in the following section of this article so you can reap all the benefits bookkeeping delegation to experts has to offer. 

Common Bookkeeping Outsourcing Mistakes 

Below are some critical mistakes businesses commonly make when outsourcing bookkeeping that deprive them of the advantages these professional services can bring. 

Selection of the wrong provider 

Choosing the correct provider is of paramount importance when outsourcing bookkeeping. Businesses often make the mistake of selecting a provider that is not the best fit for them in an attempt to cut outsourcing expenses. Hence, it is advisable to get an experienced and reliable provider on board after thorough research and considering all the available reviews and references. 

Unclear expectations and goals 

Disagreements and misunderstandings are inevitable if you do not set clear goals and expectations when entering into an outsourcing contract. For instance, it is in the interest of all the parties to clearly specify if you wish the team of professionals to handle the complete bookkeeping, accounting, and financial reporting. Otherwise, the result could be incomplete records and issues in the long run. Hence, you must ensure the deliverables, goals, and performance metrics are outlined precisely. 

No clear lines of communication

Effective communication is the building block of a successful relationship between a business and an outsourcing service. Without clear communication channels, tracking progress, providing necessary feedback, and solving problems that may occur during the execution of plans is a challenging task. Thus, you must ensure the availability of clear communication by setting up regular meetings so that both parties remain on the same page. 

Not having a Service Level Agreement. 

A Service Level Agreement (SLA) defines the expectations between the customer (your business) and the service provider (outsourcing service) and states the deliverables, the point of contact for various end-user issues, and the performance measurement metrics. Not drafting a detailed SLA can lead to unmet expectations and disputes. Hence, it is recommended to take the help of legal advisors and financial experts to draft a comprehensive SLA.

Ignorance of confidentiality and security concerns

The outsourcing service provider must have robust security measures in place to protect your financial data. You must always examine their systems to shield your information from unauthorized use and ensure they comply with security and confidentiality industry standards.

No performance review and monitoring 

A passive approach is common among businesses after they outsource bookkeeping. However, not reviewing the provider’s work and not keeping a check on their performance can lead to delays in task completion and unmet expectations. Hence, there must be regular performance monitoring and review to ensure it meets the set standards.

Not providing adequate training and onboarding assistance 

Even outsourcing service providers require training and assistance in understanding the processes and systems of your business. Not providing them with the required help can result in errors and inefficiencies. Hence, you must lend a helping hand and provide clear instructions to the service providers during the transition period.

No planning for contingencies 

Unexpected challenges (for example, the service provider discontinuing the services for some reason) can prove detrimental to your business. Thus, you must have a contingency plan to reduce the impact of these unforeseen issues.

Incorrect cost assumptions 

Even if outsourcing is a cost-saving exercise, it involves associated costs (for example, transition and training costs, extra charges for additional services, etc.). Businesses may underestimate these costs, leading to an inaccurate cost-benefit analysis. Therefore, you must consider all the outsourcing costs to understand the complete financial picture and make decisions accordingly.

Conclusion

Outsourcing bookkeeping has numerous benefits, such as specialized resource access and cost-saving, to name a few. However, smooth and successful contracting is only possible when you understand and dodge the pitfalls discussed in this article by correctly selecting service providers, properly defining the expectations, ensuring clear communication protocols, and performing regular monitoring to maximize the bookkeeping outsourcing advantages for your business.