Virtual Bookkeeping & Accounting Services: Pros & Cons
As more businesses look for accounting solutions to monitor their finances, business owners are learning that they have more options than just brick and mortar accounting firms. One popular option is hiring a virtual accounting service.
These online bookkeeping companies can monitor your business’ cash flow, prepare taxes and offer financial assessments. Often, these services are offered at a lower price than standard accountants charge.
Like any outsourcing option, a virtual service has its pros and cons. Let’s look at some of the advantages and disadvantages of using virtual bookkeeping and accounting services.
Pro – Increased Flexibility
By sending the bulk of your company’s books to a virtual accounting service, you free up your staff to focus on what really matters. With the time-consuming task of data entry resting in trusted hands, you and your employees will be able to pivot from challenges quicker and find better solutions.
Con – Losing Control
However, when you send a task out of house, you may feel like you have given up a certain degree of control. That is why you must find a virtual accounting service that you can trust, and make sure you remain aware of how your company’s finances are performing. Even though you are handing off the busy work of day to day record keeping, it remains your responsibility as a business owner to be informed about your business’ monetary health.
Pro – Quality of Service
Another bonus of hiring an online accounting firm is that they exist to make their customer’s businesses run smoother. When you use an in-house accountant, you’re often subject to a single person’s skills, experience and availability can lead to financial errors and missed deadlines. A virtual bookkeeping company often employs a team-based approach and a peer-review process which can lead to enhanced accuracy and timeliness of deliverables.
Con – Offsite Coordination
If the accounting for your business requires a significant amount of personal knowledge and in-house coordination, such as inventory tracking or a unique customer invoicing process, a virtual accounting service may not be the best fit. In this instance, you may decide to employ a combined approach where you outsource certain aspects of your business that can be handled remotely and then utilize your in-house talent to manage those tasks that require hands-on knowledge.
Pro – Electronic Recordkeeping
The nature of virtual bookkeeping requires finances to be digitized. This means that you can look at your information from anywhere, often from mobile apps right on your phone. You won’t be shuffling through folders and file cabinets to find the information that you need. Any important financial details will always be available and backed up.
Con – Proprietary Software
Some virtual bookkeeping services require you to use their proprietary software. While this may benefit that specific provider as their service providers are sure to be experts on that software, you’ll need to check what the implications will be for your data if you decide to leave that provider at some point in the future. Additionally, this proprietary software may not integrate with your entire tech stack so that may be a concern.
Pro – Superior Technology
Online accounting services use the best tools to keep track of your finances. They hire accounting professionals who are trained to use these programs to give you the clearest understanding of how money is moving through your business. With these diagnostics, you and your staff will have the best opportunity to make informed decisions.
Con – Lack of Industry Knowledge
If you are in a niche industry, make sure that the virtual bookkeeper you hire has sufficient knowledge of your business. Because most online accounting firms work with clients from a diverse field of industries, they often have excellent knowledge of general accounting and tax preparations – but there may be specifics that you will need to prepare your advisors for.
Pro – Experienced Guidance
Even if the virtual accounting help you find isn’t specialized in your industry, that doesn’t mean that they don’t have valuable insight. One of the advantages of using outsourced accounting services is that they have been a part of keeping many businesses above water. They have seen what has worked and what has not and will be able to give you advice that an in-house accountant would not be qualified to.
Overall, virtual booking and accounting services are a great choice for many types of businesses of all sizes.
Learn more about growing your business through optimized accounting operations in our free guide.