In Summary
- Addressing late and inaccurate financial reports or habitually missed tax deadlines indicates significant issues in the accounting process needing immediate remedy. Solutions range from simple process changes, software upgrades, and training to more complex steps like hiring or terminating staff.
- When considering outsourced accounting as an alternative to hiring, evaluate potential providers on several key factors. Essential criteria include relevant industry experience, the quality of their talent pool, robust data security policies, a clear pricing model, and their communication practices.
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Most Denver businesses spend little time thinking about the accounting or financial reporting process. Leadership often has multiple priorities to address and projects to manage. This leaves little time to focus on departmental issues until problems arise. When monthly reports are late and filled with inaccuracies and inconsistencies, it isn’t easy to rely on the information provided. For others, issues occur when tax compliance and other deadlines are routinely missed, resulting in extensions or late filings. Missing deadlines and consistent inaccuracies are signs of significant problems in the accounting and financial reporting process that must be fixed. Remedying the issue may be as simple as making process changes, upgrading software, or additional training. In other cases, it makes sense to hire new staff, terminate underperforming ones, and to revisit specific issues. Hiring new staff is a tricky proposition for many businesses because of the costs (salary, benefits, PTO) and the time it takes to get onboard. Rather than hire, many Denver businesses turn to outsourced accounting to step in and address the problem. Yet, with so many options available, how does one select the right provider? To help clients, prospects, and others, Hanson & Co has summarized the key details below.Key Consideration in the Evaluation Process
- Industry Experience—It is important to clarify whether the provider has experience with businesses in your industry. While most accounting techniques are similar, there are important nuances that change between industries. For example, the way a construction company accounts for revenue can be very different from that of a nonprofit organization. For this reason, it is necessary to determine if the provider has the requisite experience to manage the company’s needs effectively.
- Talent Pool – Since a key benefit of outsourcing comes from the ability to add a professional with significant experience, it is essential to understand the quality of the talent pool. Ask about their team’s knowledge, relevant certifications, credentials, and licensing. It’s also important to evaluate the team’s familiarity with the company’s accounting software. Spend time investigating who will handle your account and specific information about them as well.
- Data Security Policies—It is important to discuss data security policies and other cyber protection measures. Physical security measures, mandatory password policies, encryption methods, and data breach protocols should be carefully considered. Also, consider asking about what happens to your files when the provider finishes with them. Pay careful attention to responses to ensure you are comfortable with the answers.
- Pricing Model – It is also necessary to ask about the pricing model. Many outsourced providers have several pricing options, including standard and customized plans. There may also be discounts for adding certain services as well. Most bills are based on the time and duration of the services provided. However, some offer a pay-per-use model and hourly pricing. Spend time asking about these topics, and remember the payment policy.
- Communication—Spend time discussing the provider’s communication policies and responsiveness. If the provider will be 100% remote, inquire about standard communication practices in that format versus in-house providers. If there is an in-office presence, be sure to gather details about who will come, how often, and what accommodation will be needed.