This is the first in a two-part series focused entirely on the year-end close process. Businesses are looking back over the past year to decide how to proceed throughout the current. Making these decisions isn’t easy and the consequences run deep, which is why it’s so important to act based on the 2019 data.
What last year’s data cannot tell you is how to account for shortfalls. After diving into the details, you may conclude that your overhead costs have become unsustainable, creating a liability that will only grow bigger by the end of 2020. Alternately, you might discover that your overhead costs are inhibiting your ability to carry out your strategy, sucking up resources better spent elsewhere. The data can tell you when your expenses are a problem, but it’s up to you to find the solution.
Does the Year-End Review Recommend Outsourcing?
No matter what form your budget shortfall takes, you need to reduce overhead costs one way or another. There are lots of ways to do that, but few more effective overall than choosing to outsource some or all of your accounting workflows.
Though essential, accounting is also a huge cost center. When you factor in salaries and benefits along with technology costs and other related expenses, companies invest a lot to get the accounting capabilities they need. However, if overhead costs are in the red and there are viable alternatives to in-house accounting, companies are investing too much in accounting.
Outsourcing is a viable alternative because outsourced accountants can perform all the same responsibilities – bookkeeping, billing, reporting, reconciling, etc – as in-house accountants and to the same high standards. Except outsourced accountants cost significantly less and come with more flexibility than a full-time hire.
Relying on outsourced accountants can help you manage overhead costs in two ways. First, by allowing you to spend less on accounting without compromising quality or consistency. Second, by enabling you to add accountants (generalists or specialists) to the team at a fraction of the cost. In either case, outsourced accounting eliminates a major source of operating expenses. What will you spend the savings on?
Making The New Year Your Best Year
In the next part of our series on year-end financials, we will explore something that’s arguably even worse than budget shortfalls – information deficits. In today’s fast-paced, data-driven economy, no one can afford to act without detailed insights at their disposal, and yet a lot of companies are flying blind.
We encourage you to come back for Part 2. If you would like to explore outsourcing options before that, please contact CDH at your convenience.