Outsourcing admin & accounts - what could go wrong?

[mother]

My small business has grown to a point where I either need to employ someone part time to do our admin & accounts or I'm going to wake up in a white jacket with very stylish wrap-around sleeves one morning. So now I've decided to employ another small business that offers exactly this service, to come in once a week to do all our admin & accounting.

What can go wrong with this? Bearing in mind that our business is probably 80% built on intellectual property, so obviously I would insist on an NDA, but what other precautions should I take?

I'd love to hear from anyone who has done this before, or even if you haven't, but are aware of the possible risks, whatever.

[KimH]

Hi Mother, one of the aspects of my business is an outsourced accounting function for small business owners.

If I can offer you any advice at all, that would be to carefully check the references of the person you are hiring - all too often someone who has done basic bookkeeping for a year decides to open their own business and they do not have the necessary experience and you end up having to pay an accountant to fix the mess. Interview carefully, possibly even draw up a basic accounting test to check if their skill level matches what they say they can do.

In addition to the NDA I would recommend you draw up a service agreement clearly indicating your expectations, deadline dates, fees etc.

Outsourcing is becoming more and more popular.

There is a common misconception that an owner will lose control if they outsource the bookkeeping. In a properly designed system a local accountant only takes over the process of tracking transactions such as sales, accounts payable and balancing the books, but only the business owner makes management decisions. Using on line bill paying, the owner is the final word on who gets paid and when.
In most cases outsourcing will save you money as well. The most common pricing structure for outsourced bookkeeping is to charge 40% to 50% less than the current bookkeepers salary. Not only do you save on salary but also you have no overhead, management, hiring or training cost when using an outsourced service. The overall annual savings are astronomical.

Best of luck!

[mother]

Thanks Kim!

Honestly, I was concerned about losing control at first, but then I realized that this person/business will actually assist me, so I can have access to better information quicker. I won't be handing them the reigns, they will be freeing my hands so I can have a better grip on the reigns.

I'll definitely take your advice and draw up a detailed service agreement. And you are absolutely right about the outsourcing saving us money, and time (which, let me tell you, is probably most valuable commodity to any small business owner).

Thanks again for your advice.