Outsourcing accounting has become a popular practice among businesses of all sizes. In today’s competitive business environment, outsourcing accounting services can provide a range of benefits that can help companies improve their financial management, lower costs, and increase efficiency. In this article, we will explore the benefits of outsourcing accounting with Transaction Cost Economics and provide industry-specific statistics and facts to support our claims.
Transaction Cost Economics (TCE) is a theory that explains how companies can minimize their costs by outsourcing non-core activities to external vendors who specialize in these activities. According to TCE, companies can save money by outsourcing accounting because it reduces transaction costs, which are the costs incurred when conducting transactions in-house.
One of the main benefits of outsourcing accounting is cost savings. Outsourcing accounting services can be significantly cheaper than hiring an in-house team. This is because outsourcing providers have economies of scale and can spread their fixed costs over multiple clients. In addition, outsourcing providers are often based in lower-cost regions, which means that labor costs are lower. According to a survey conducted by Deloitte, companies that outsourced their finance and accounting functions reported cost savings of up to 40%.
Another benefit of outsourcing accounting is improved financial management. Outsourcing providers have the expertise and experience to provide accurate and timely financial statements, which can help businesses make informed decisions. In addition, outsourcing accounting services can provide access to the latest accounting technology and tools, which can help businesses stay ahead of their competitors.
Outsourcing accounting can also increase efficiency. By outsourcing non-core activities, businesses can focus on their core competencies and strategic goals. This can lead to greater productivity and efficiency, which can help businesses achieve their objectives faster. According to a study conducted by the Society for Human Resource Management, outsourcing accounting services can increase productivity by up to 9%.
In addition to these benefits, outsourcing accounting can provide other advantages, such as access to a global talent pool, improved compliance, and reduced risk. For example, outsourcing providers are often located in different countries, meaning businesses can access a global talent pool and benefit from diverse expertise and cultural knowledge. Outsourcing providers are also experts in compliance and can help businesses navigate complex regulations and reduce the risk of non-compliance.
When it comes to industry-specific statistics and facts, the benefits of outsourcing accounting are particularly relevant for small and medium-sized businesses (SMBs). According to a survey conducted by Sage, SMBs that outsourced their accounting reported a significant reduction in the time spent on financial management tasks, which allowed them to focus on growing their businesses. In addition, SMBs that outsourced accounting reported higher levels of satisfaction with their financial management than those that did not.
In the healthcare industry, outsourcing accounting can provide significant benefits. According to a report by Black Book, healthcare organizations that outsourced their accounting reported significant cost savings, improved financial management, and increased efficiency. In addition, outsourcing accounting can help healthcare organizations comply with complex regulations, such as HIPAA and the Affordable Care Act.
In the manufacturing industry, outsourcing accounting can provide benefits such as improved supply chain management and reduced costs. According to a survey conducted by Deloitte, manufacturing companies that outsourced accounting reported significant improvements in supply chain visibility, which allowed them to make more informed decisions. In addition, outsourcing accounting can help manufacturing companies reduce costs by improving inventory management and reducing waste.
In conclusion, outsourcing accounting can provide a range of benefits to businesses of all sizes and across industries. Outsourcing accounting can help businesses save money, improve financial management, and increase efficiency by reducing transaction costs. Industry-specific statistics and facts show that outsourcing accounting is particularly beneficial for SMBs, healthcare organizations, and manufacturing companies. As businesses continue to face pressure to cut costs and improve performance, outsourcing accounting is likely to become an even more important strategy for success.
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