To stay competitive in rapidly changing business climates, companies of all sizes and across all industries are constantly looking for new ways to cut costs, increase efficiency and ultimately boost profits. This is especially true for startup companies in the hyper-competitive innovation/technology space. The trend today is to outsource many of the tasks not related to your company’s core competency, that is, the activity that will ultimately drive revenue and grow your company or the reason you started your business in the first place. Outsourcing certain tasks goes a long way in helping organizations meet productivity goals, cut back on overhead costs, and ensure company employees are using their time and energy to focus on core competencies.
Should you invest the money in outsourced accounting services to simplify business processes related to bookkeeping and finance? Let’s look at five ways hiring an outsourced business accounting service can help your startup business.
1. Build good business habits from the start
Many startup business owners tend to neglect bookkeeping and then panic when tax time comes around because their “bookkeeping files” are actually just a box full of receipts. If you become accustomed to working with a bookkeeping service from the start, you’ll develop good business habits that will help you righten reins on expenses and always know where your company stands financially. Up-to-date bookkeeping records will help the decision leaders of your startup make informed and better business decisions as well. Plus, a good outsourced business accounting service can teach the “hows and “whys” of business accounting so you understand what is happening each and every step of the way. After all.
2. Advice you can trust in your company’s crucial years
The right outsourced accounting service is more than just a data entry provider or Quickbooks operator. A good controller and accounting services offer advice, counsel, and insight while preparing your financial statements, budgets, forecasts, and dashboards to monitor all your financial data. Having all the financial data you need to run your business is useless if you can’t understand what the numbers mean. An outsourced accounting service will have someone explain to you what the financial statements mean, and help you make the decisions that will steer your startup toward growth.
3. Outsourced accounting, bookkeeping and controller services can scale with your company’s needs.
Based on your company’s expanding needs, an outsourced accounting firm can scale up when required as compared to when you manage it in-house, you will have to get into the daunting task of hiring someone to cater to your expanding needs. Startups don’t often have the budget to hire a full-time accountant or controller and would be better off paying for exactly what they need.
It is essential finding an accounting service that can scale to your startup’s needs. Perhaps now you simply need monthly service to reconcile and close your books but you may need comprehensive daily services down the road. Instead of having to manage a major transfer from a single part-time in house bookkeeper to an outsourced accounting service later, start with a service that can handle all of your needs now and later.
4. Get the information you need to seek investment capital
As a startup, you may need financial help from investors. Other than managing your books and accounts, your outsourced accounting company can help in getting the data ready that can be presented to the investors and in the right way. Having accurate and up-to-date bookkeeping records along with insightful financial statements could mean the difference between getting the money you need for your startup to grow or having to call it quits.
Outsourced accounting services will provide you with accurate and timely bookkeeping records and can even prepare all the financial statements you need. A good accounting service will provide explanations of the data in those financial statements, which can help your company shine admits all those other startup businesses that are not as prepared.
5. Calculate your burn rate
According to Investopedia, “Burn rate is normally used to describe the rate at which a new company is spending its venture capital to finance overhead before generating positive cash flow from operations.” Do you know your company’s burn rate? An accounting firm can calculate your burn rate which lets you determine how long you can sustain in your business based on your current spending. This is especially important to know if you’re a tech startup or another early-stage company with a long lead time before you’ll start generating revenue from sales.
Limitless Investment and Capital Outsourced Business Accounting Services
It can be tough to stay focused on building your business when your in-house accounting function is not performing optimally. Bank, credit card, and payroll transactions all require a specific system to operate properly, and if you allow these systems to not function well, or even break, you’re costing yourself and your business money. What’s more, your time should be spent on growing your business, not digging through financial documents that are from prior quarters. At Limitless Investment & Capital, we strive to deliver the best service possible to you, so that you can focus your efforts on growing your business, not working in it. We believe in our ability to find accounting solutions for your business no matter how unique. Give us a call today to schedule your consultation.