Table of Contents:
- Introduction
- Why Outsourcing Finances and Accounting is Very Important.
- 10 Signs your Business Needs to Outsource your Accounting
- Increasing Operational Costs
- Missed Deadlines
- Financial Tasks Backlog
- Compliance
- Required Specialized Knowledge
- Tool Propagation and Inefficiencies
- Deteriorating quality of financial reports.
- Difficult to scale the operations.
- Leadership engaging in bookkeeping instead of strategy
- High turnover in finance roles.
- Final Thoughts
- FAQs
Introduction
There comes a time in many businesses, often after a period of growth or a completely unexpected compliance incident where using an in-house finance team causes inefficiencies or potentially increases risk. Outsourcing finance and accounting is not a sign of failure, but a decision to gain the right expertise, infrastructure and consistency without needing to hire and manage a bigger and bigger team. Understanding when to outsource accounting is very important and this blog will help you answer this question.
Why Outsourcing Finances and Accounting is Very Important.
Most outsourcing firms, like Atidiv, position themselves as full-service partners, covering bookkeeping, reporting, financial planning and clean-up work and they advertise outcomes like cost reductions and faster closures for companies who were struggling with in-house issues. Atidiv, for instance, highlights end-to-end finance services, with 16+ years’ experience, and competitive hourly starting rates for bookkeeping.
A recent case study from Atidiv highlighted the case of an NYC startup who, after moving the work to an experienced provider, improved time-to-close and cheaper prices, a good example of the outsourcing value if done properly.
10 Signs your Business Needs to Outsource your Accounting
1. Increasing Operational Costs
When monitoring your finance team’s overhead, if you are seeing cost increases, increased wages, software licences, training, temporary staff that means you have hit your first warning light. While in-house accounting may have made sense, if it becomes a budget sinkhole with little return.
Implementation Tip: Compare your current cost of operating your finance department in-house with a formal quote from outsourcing partners. Consider hidden costs (turnover, onboarding, technology upgrades).
Why this points to outsourcing: Outsourcing takes what was fixed cost and turns it into variable, and often provides access to greater resources at a lower cost than running your finance group in-house. So, if you are pondering when to outsource accounting, this is a great trigger point.
2. Missed Deadlines
Late financial closes, late invoices, late payroll–missed deadlines represent more than just annoyance. They can serve as a signal that you, as the company, are over-stressed or lack process discipline.
Implementation Tip: Keep track of deadlines (closes, reporting, filings) recently missed. How many total builds, what caused any missed deadlines.
Why this points to outsourcing: An outsourced provider usually operates on tighter SLAs (Service Level Agreements) and often to published workflows. If you consistently miss deadlines internally, the question of when to outsource accounting will soon become a relevant question.
3. Financial Tasks Backlog
If there’s a growing list of entries to be processed, reconciliations to do, and catch-up work to be done, something is clearly broken. If you are always in a catch-up mode, you are no longer being proactive, and finance is not aligned to support growth.
Implementation Tip: Track your task list and age of tasks. Do you have items that are older than a week, a month? Do you have lists of ad-hoc clean-ups?
Why it suggests consideration for outsourcing: Outsourcing is a tactical way to clean up and set an organization on a solid path and allow you to transition from reactive to strategic work.
4. Compliance
Regulation does not wait. Local tax filing requirements, international reporting standards, new compliance requirements in the industry—questions on whether you are getting it wrong, these can represent significant risk even in the domestic environment.
Implementation Tip: Review the last couple of audits, checking for near misses or mistakes. In addition, ask your team if we have the skill set and capacity to prepare for compliance requirements.
Why it suggests consideration of outsourcing: External partners often specialize in compliance and changes in compliance – making an outsourced partner less complicated for an organization. So when to outsource accounting, compliance risk is a strong indicator.
5. Required Specialized Knowledge
You might require some forensic accounting or international tax expertise, or merely some advanced analytics, or perhaps even a components system. If your current staff cannot do the complete job, then your firm is likely missing the boat.
Implementation Tip: Jot down tasks not easily handled by your current staff or tasks that you would prefer to hire someone. What are the missing skills in your current staffing?
Why this is a strong indicator to consider outsourcing: Instead of assuming that you need to hire multiple specialists internally, outsourcing gives you relay access to a wide array of skill sets. Now, this probably triggers the “when to outsourcing accounting” thinking in a growth-business.
6. Tool Propagation and Inefficiencies
Are you using eight different tools for finance because none of them talk to each other? Is data everywhere, scattered among spreadsheets, legacy systems, and cloud apps?
Implementation Tip: Map your tech stack out. How many systems do you have? How many manual hand-offs? How many redundant processes?
Why this would tell you when to outsource for: A good outsourcing accounting partner will provide process design, integration, and efficiency. If your internal mess is slowing down the delivery of your accounting internal process? At that point in time, that is when to consider outsourcing accounting.
7. Deteriorating quality of financial reports.
What to watch: reports that contain errors, dashboards that are outdated or key performance indicators that do not make sense.
Why you care: poor reports create delays in decision-making and damage investor confidence.
What to do about it: seek feedback from the board/investors on the reports they look at. If they want accuracy and timeliness, then look for a firm to leverage your analytics and reporting functions.
8. Difficult to scale the operations.
What to watch: ongoing growth, and your finance function is falling behind (new markets, multi-currency, inventory complexity).
Why you care: if growth scales faster than the finance function can keep up with, you are destroying momentum on product and sales efforts.
What to do about it: imagine you have a scenario with 50% growth. If the growth outstrips current internal capacity to manage it, then outsource your growth to a firm that provides ‘scalable bandwidth’ to your requirements and knowledge in multiple market sectors.
9. Leadership engaging in bookkeeping instead of strategy
Red flags: founders or product heads doing expense approvals, petty reconciliations, or chasing invoices.
Why it matters: time is the scarcest resource. Strategic leadership should be spending time on growth, not on recurring admin.
Actions: track leadership time in finance for one week. If >8–10 hours for low leverage work, then consider outsourcing.
10. High turnover in finance roles.
Red flags: whether hiring is repetitive, or roles are short term, or are continuously training individuals.
Why it matters: turnover means not just hiring costs, but also the cost of lost institutional knowledge and recurring disruption.
Actions: look into why turnover is happening. Outsourcing can potentially provide process continuity and standardisation where internal hires do not.
Final Thoughts
Deciding when to outsource accounting, it’s not about an exact number, but it’s more about spotting the signals: costs increasing, deadlines being missed, pain of growth, compliance risk, and losing focus on your business. If one or more of these ten signals are applying in your business, it is time to stop and investigate trusted outsourcing partners. They will provide peace of mind, and return your time, so you can pivot back to growth and improved strategy.
FAQs
1. What are the risks of outsourcing accounting?
Risks may involve data security, lack of direct oversight, communication barriers due to time zones, or general service quality. Often, vendors will have these addressed with a SOC 2 or GDPR compliant process, communications that always encrypt, a transparent process, and great references to create reciprocal trust.
2. How can I ensure quality when outsourcing?
Assurances of quality include well-defined SLAs, regular review of performance, and audits. Selecting a partner who is experienced, transparent in reporting, and open in style helps to ensure that quality will be maintained over time.
3. What is the typical ramp-up time for outsourced services?
The transition process varies from an average of 4-12 weeks. This will include onboarding, data migration, systems integration, team training, and process alignment. Planning ahead of time effectively will shed light on this, and where possible, open communication will enable a seamless transition with a great outcome for the service at limited downtime.
4. How do I choose the right outsourcing partner?
Assess vendors on their knowledge of your industry, standards of compliance, use of technology, ratings from customers, and if they have the ability to scale accordingly. Be sure to ask for references and case studies that pertain to your industry and inquire if the vendor’s values and communication style fit yours.
5. Can I maintain control over my financial data with outsourcing?
Yes, control is maintained through detailed contracts, real-time access through dashboards, regular status updates, and access management. Clarify ownership of your data and discuss and agree on the processes for escalation of issues and concerns at the beginning.