If you’re curious about how you might benefit from outsourcing, you’re not alone. Last year, 52% of small firms said they plan to outsource at least one business process.
Outsourcing is defined as hiring an external third party to take on tasks and complete processes that would otherwise be done inhouse. The top reasons small businesses give for outsourcing are cutting costs, increasing efficiencies, and accessing expertise. The most frequently outsourced tasks are accounting and finance (37%), IT services (37%), and digital marketing (34%).
If the fee for hiring an experienced finance and accounting firm gives you pause, carefully consider the benefits before you make a final decision on outsourcing:
You won’t have to wrestle with FAR and DCAA compliance on your own.
Govcons face specialized demands due to the Federal Acquisition Regulations (FAR) and the Defense Contract Audit Agency (DCAA) rules for government contracts. The complex, interrelated accounting terms and conditions are designed to ensure the government gets the best pricing. Compliance is no small feat and can shift depending on contract specifics. Does your staff have the expertise to ensure legal and financial compliance?
You can focus on what you do best.
Your company’s claim to fame is your core business. The primary mission of your leadership and staff is to hone your expertise and capture customers. When you outsource accounting complexities, in-house management and staff are free to grow your business and develop your core competencies.
Your accounting support and processes will be complete and up to date.
Outsourced accounting and finance experts who remain competitive must invest the time and money to keep up on the latest technology, software, and government regulations.
You can avoid the time and expense of developing an accounting department.
Building up Govcon accounting expertise is not easy or cheap. Do you want to devote the time, energy, and resources to recruit new employees, then provide and track benefits, office space, software and equipment, and ongoing training? Outsourcing can get you decades or more of virtual back-office accounting and financial expertise—ranging from clerk to chief financial officer (CFO)—for a fraction of the price to build an internal team—not to mention benefits and other support costs. Outsourcing can also supplement your current accounting team for short-term project needs.
You’ll get the numbers right.
Besides keeping your company FAR- and DCAA-compliant, outsourcing your accounting and financials can keep you accurate and up to date on other obligations and save you money. Did you know, for example, that nearly one-third (30%) of small business owners believe they are overpaying their taxes?
You’ll be gazing into a clear crystal ball.
Accounting and financial functions set the direction for many other of your firm’s operations and marketing strategies. Management needs timely, accurate data to make decisions that guide your business in the right direction. Outsourcing can even provide C-suite-level expertise to help you brainstorm your strategy. Yet 61% of small companies said in a recent survey said they did not even create a formally documented budget in 2018. Outsourcing can be your alternative to a leap in the dark.
Make the Most of Your Outsourcing Partner
Once you have chosen a financial/accounting firm with Govcon expertise, look for a company that can provide all the services you need. Below is a sample checklist:
Communication, Transparency, Accountability:
- Establish how often and when you will communicate with your outsourcing partner. Monthly—or as often as needed—is the ideal.
- Make sure you have access to all of your financial information when you need it.
- Be sure that your outsourced accounting/financial firm has very strong system expertise in your software tools, whether that is Unanet, Deltek, QuickBooks, or other, along with Microsoft products.
Core Accounting and Financial Metrics:
- Payroll, expense reports, accounts payable, cash receipts, invoicing, bank reconciliation, journal entries compliant with Generally Accepted Accounting Principles (GAAP).
- Monthly, quarterly, and year-end accounting, financial, and tax planning support.
DCAA Compliance:
- Create a DCAA-compliant accounting system, including the transition from the current system.
- Conduct independent compliance system reviews.
- Develop a DCAA-acceptable rate structure suited to your company.
- Prepare for any audit.
Financial Management Metrics:
- Ability to reformat static and/or paper-based data into dynamic, actionable information in digital formats.
- Create scorecards for cash and receivables, income statements, indirect rate and cost performance, utilization, backlog, and other key performance indicators.
To find out more about how accounting and financial outsourcing can up your game in the government marketplace, contact the Govcon experts at CAVU.