Small Businesses
Typically, one or more of these triggers usually need to occur for a small business owner to start thinking about finding a new accounting solution:
Reaching $1 million in revenues
Employing eight to ten people
Accepting outside investor capital
CEO can no longer be involved in every aspect of the business
Entering the accelerated growth stage of the business lifecycle
Needing to get more out of QuickBooks than billing and collections
Wanting technology systems to interface and talk to each other
Requiring more sophisticated financial reports for data-based decision-making
We find business owners with a “getting better” agenda, who are not happy with the status quo, often value outsourcing accounting as a way to quickly move up to management accounting. They see outsourcing as a competitive advantage that allows them to be the best in class without any upfront investment of time or money.
Small business owners born in the Millennial Generation are also likely to have the psychographics to embrace outsourcing. Growing up surrounded by technology, they believe outsourcing has a strategic advantage and a positive effect on employees, their number one business asset.
Nonprofit Organizations
Similar management psychographics and life-cycle milestones occur in nonprofit organizations, triggering a need for a new and improved accounting solution.
A nonprofit executive director typically has a passion for a charitable cause, not managing accounting. The director might find a qualified volunteer to tackle the bookkeeping task, but that person usually bales when the accounting tasks accelerate.
Nevertheless, just like with small businesses, accurate financial reporting is a key factor influencing growth and survival in the nonprofit world. If you’re a nonprofit you may start to think about a new accounting solution when one or more of the following triggers occur:
Revenues reach $500,000, mandating audits in many cases.
The Board of Directors requires more confidence in the financial reports
Programs are competing for limited funds and need ROI justification
Acquiring grants necessitates foundation reporting
Transitioning to true Fund Accounting requires, the accrual basis of accounting
We believe a nonprofit organization should be run like a for-profit business with the same management reporting; however, the difference is that profits are invested back into the programs.
Fund Accounting, which is more advanced, is usually beyond the means of a bookkeeper trained in cash-based accounting and can cause stress in the nonprofit’s financial operations.
Start up
For most startups, outsourcing is an effective accounting solution, for the following reasons:
Company have limited budget
Owner or management spending excess time on accounting details.
Company is growing rapidly
Cost Flexibility
When you outsource work, you only pay for the services you need. If you’re a startup, you may not have enough bookkeeping or accounting work to require full-time help. You can protect your capital by outsourcing those services and only paying for the work you need. As your business grows, you can expand your services.
Expert Advice & Service
As you likely know, talent can mean the difference between survival and failure as a startup. If you can recruit smart, experienced, innovative people, you can get a leg up on the competition.
Unfortunately, you may not have the budget to hire an experienced, skilled accountant or even bookkeeper on a full-time basis. However, outsourcing gives you access to high-level financial talent without straining your budget. You only pay for the work you need, and you share your accountant with other clients. That helps you get expert advice at a fraction of the cost.
Clean, Credible Financial Statements for Investors
Raising capital is one of the biggest accounting challenges for any startup. An experienced accounting firm can make sure your books and your financial records are up-to-date and accurate.
They can also provide you with valuable consultation and advice through the fundraising process. For example, they may help you determine how much you need to raise given your current burn rate. Or they might provide business valuation so you know what your company is worth. It’s tough to get that kind of insight from an in-house bookkeeper.
What is next?
CYCC has been providing outsourcing services since year 2012, we've been helping hundreds of business owners with their financial accounting by helping them in setting up their accounting systems, and customized to their specific need
Finally, we launched ”Remote Outsourcing Accounting Services”in Jan 2021. As a business, you just need to send your invoices, bills and bank statements to us. Our team of expert accountants takes care of bookkeeping and tax filing.
Sounds interesting? Please contact us for a free consultation.
Disclaimer: Note this post is not financial nor accounting/tax advice and should be used for entertainment purposes only. Consult with your own financial advisor, accountant and/or tax advisor for specific advice related to your business situation and needs.