How Much Does Outsourced Bookkeeping Cost?

Written by Elements Advisory Group
July 7, 2023
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Bookkeeper, bookkeeping, costs, outsourced

Many business owners are understandably hesitant about making significant financial commitments in today’s uncertain economic climate.

However, outsourced bookkeeping has emerged as a valuable solution for businesses in financial management. Particularly small businesses that may need more resources to maintain an in-house accounting department.

The Factors Influencing the Cost of Outsourced Bookkeeping for Businesses

Outsourcing your accounting allows businesses to delegate bookkeeping tasks to external professionals or firms. This lets you focus on core operations while ensuring accurate and compliant financial records.

But managing your company finances does not have to drain half of your hard-earned cash.

If you are thinking about outsourcing your bookkeeping, here are the factors that impact the cost of outsourced bookkeeping for businesses in Australia.

What is outsourced bookkeeping?

Outsourced bookkeeping is when a business entrusts financial transactions’ recording, organising, and managing to external bookkeeping professionals or firms.

These professionals use accounting principles and software expertise to handle daily bookkeeping tasks. These tasks include data entry, bank reconciliations, accounts payable and receivable management, payroll processing, and financial statement preparation.

Outsourcing these bookkeeping functions allows businesses to access specialised knowledge and experience without needing an in-house bookkeeping team. This expertise may inform pivotal financial decisions that business owners need to make.

It is also highly cost-effective as outsourcing can be scaled according to the work required. Having a part-time financial accountant would involve wages, superannuation and leave requirements.

What does outsourced bookkeeping cost?

There is no set fee for the industry; however, a few factors impact the cost of outsourced bookkeeping.

1. Business Size and Complexity

The size and complexity of your business are crucial factors that influence the cost of outsourced bookkeeping.

Small businesses with fewer transactions and more superficial financial structures tend to have lower bookkeeping costs compared to larger enterprises.

The volume of transactions, number of employees, and complexity of financial reporting requirements are all considered when determining pricing.

For instance, a small retail store with limited monthly transactions may only require basic bookkeeping services. In contrast, a large manufacturing company with numerous transactions, inventory management, and complex payroll needs would require more comprehensive bookkeeping services, leading to a higher cost.

2. Scope of Bookkeeping Services

The scope of bookkeeping services you require also plays a significant role in determining the cost.

Some businesses may only need basic services such as data entry, bank reconciliation, and financial statement preparation.

Others may require additional services like payroll processing, accounts payable and receivable management, and tax compliance.

When outsourcing your bookkeeping, it is essential to clearly define your needs to ensure accurate pricing. You can work with your accounting firm to develop a customised package by outlining the scope of services required. Create a deal that meets your specific needs while aligning with your budget.

3. Frequency and Timeliness of Reporting

The frequency and timeliness of financial reporting your business requires can impact the cost of outsourced bookkeeping. Some companies may opt for monthly financial statements, while others may require more frequent reports.

The more frequently you require financial reports, the more time and resources will need to be allocated, leading to increased costs.

Similarly, if your business operates on a tight schedule with strict deadlines for reporting, the accounting firm may need to prioritise your work, potentially resulting in higher fees. Therefore, it is crucial to establish clear reporting expectations and balance timely reporting with cost considerations.

4. Technology and Software Requirements

The technology and software used by your accounting firm can also influence the cost of outsourced bookkeeping.

Advanced accounting software offers automation capabilities, seamless integration, and increased efficiency. All of which can reduce the time and effort required for bookkeeping tasks.

However, more sophisticated software often comes at a higher cost. It is essential to discuss with your accounting firm the software they utilise and any associated costs.

Choosing an accounting firm that utilises modern software can save you money in the long run by streamlining processes and reducing the manual workload.

Elements Advisory Group, for example, integrate all of our clients into Xero.

5. Level of Expertise and Experience

The level of expertise and experience of the bookkeeping professionals working on your accounts is another factor that affects the cost.

Highly qualified professionals with specialised knowledge may command higher fees, but their expertise can also ensure meaningful reporting and compliance.

While opting for the lowest-priced provider may be tempting, seek to strike a balance between cost and quality.

Engaging an accounting firm with skilled professionals can help you avoid costly errors, minimise financial risks, and ultimately save you money in the long term.

What may appear as a short-term loss may result in long-term growth and substantial profitability.

Is Outsourced Bookkeeping Right for My Business?

Outsourcing bookkeeping can be a cost-effective solution for businesses in Australia, even in an uncertain economic climate. By understanding the factors that impact the cost of outsourced bookkeeping, business owners can make informed decisions to maximise resources.

By working closely with an accounting firm, business owners can tailor their bookkeeping package to meet their unique needs, balance cost and quality, and achieve financial stability in today’s challenging business environment.

Choose wisely, invest in professional bookkeeping services, and focus on what matters most: growing your business.

Partner with Elements Advisory Group today and experience the benefits of outsourcing your bookkeeping needs in a cost-effective and secure manner.

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