Steps to Transition In-House Bookkeeping Operations to an Outsourced Firm
Being an entrepreneur and small business owner is indeed exciting. But there is one thing that most business owners aren’t fond of – handling bookkeeping and accounting. And if you think nothing’s worse than rummaging through scores of financial data and compiling it into useful reports right now, when your business is still small and local, think again. Because when your business really takes off and begins growing, the volume of your financial operations will also multiply, as will their complexity and tax implications. Sounds scary, but there is a solution: outsourcing your bookkeeping to a professional firm that can handle high capacity, complexity, and compliance all at once, without giving you sleepless nights.
Steps to Transition In-House Bookkeeping Operations to an Outsourced Firm
Transitions of any kind, personal or business-related, can often be bumpy if not done with care and caution. When transitioning from in-house bookkeeping to outsourcing, there are several things to take care of beforehand to ensure a smooth, seamless process.
To Begin:
Firstly, assess your current accounting process and note the things you want the bookkeeping firm to take special care of once they are on board. Some of the details you need to make note of are:
- What internal bookkeeping software or system do you use?
- What are the challenges you face in bookkeeping?
- What causes most delays or errors in reporting financial data?
- Do you only need data-entry help, software advice, or CFO-level support?
Based on these requirements, look for a reliable bookkeeping firm with industry experience, strong security protocols, and trustworthy references to help you in these areas.
After selecting the bookkeeping firm, it’s time to begin the transition from internal to outsourced bookkeeping.
Prepare a Transition Schedule with the Accounting Firm
An effective transition cannot happen overnight. In fact, it takes a few months from commencement to completion of the process. Chalk out a realistic transition schedule with the accounting firm and complete the transition in phases. The first phase will involve handing over your existing data to the firm and initiating the integration of your current tools and systems with their new ones.
The next phase will see the first round of financial record reconciliation and process audits to look for any hidden gaps or bottlenecks in the system. In the meantime, the in-house team will report transactions simultaneously. Only after these processes are smoothed will regular reporting begin, followed by performance checks and troubleshooting exercises, if necessary.
Data Handover
This involves gathering, updating, and categorizing all financial documents, including bank statements, invoices, receipts, payroll records, tax filings, vendor contracts, and more.
You need to hand over complete and accurate data. Look for any duplicate entries, misclassified or missing transactions, unreconciled accounts, unpaid bills, or uncollected receivables, and clear them all before giving the data to the accounting firm. Any errors in this step will be carried over into the new system, adversely affecting your financial reporting and decision-making. So ensure it is done with caution.
Tool Integration Through Secure Access to the System
The accounting firm will require access to your in-house systems and tools to successfully configure and integrate the new system with the existing one. For this, you will need to set up a secure VPN connection and enable remote access for the offshore team, using multi-factor authentication for added security. Also, you will have to give them access to your payroll system, bank transactions, cloud accounting software, and any document-sharing or storage platforms. Sharing a list of all the systems or software your business uses, their login credentials, and putting them in touch with your tech officer or IT personnel will help the accounting firm do its work smoothly.
Set Up a Communication Process
Clear communication and coordination between the internal team and the accounting firm are crucial for an effective transition. Delegating a single point of contact within the company makes the transition easier and avoids duplication of work. A clear communication channel, such as weekly or monthly reviews, can help share insights and observations between parties.
Aligning Work Methods and Trial Reporting
As the work progresses, the accounting firm will run trials of the new system to check for any gaps in the process. If you have any specific requests for bookkeeping, this is the time to share it with the firm. How frequently would you like to reconcile bank statements? What format or template do you want for invoices? How would you like to record recurring entries or vendor categorization? Any company-specific bookkeeping details can be incorporated into the new system.
Professional Bookkeeping and Reporting
Once your basic system set-up is ready, you can work with the accounting firm to refine the processes and fill in any noticeable gaps that might have been present in the old system. Check the turnaround times, communication response windows, system accuracy, and any measurable commitments before formalizing the service level agreements.
Optimizing Scope of Work Post-Transition
Setting up and getting the new system up and running is only one part of the transition process. The other part is monitoring the new system’s performance and effectiveness post-transition. Occasionally, check the accuracy of the financial data and statements from the new system. Are all transactions being tracked in real-time? Is there a marked improvement in cash flow management and decision-making? Are all compliance and tax rules being followed properly?
Proper communication channels, coordination among teams, and adhering to schedules and plans are vital to the successful transition from an in-house bookkeeping system to a professional, outsourced one. Outsourcing your bookkeeping requirements will open more time for your employees and yourself to focus on business growth opportunities, while also ensuring your financial health is in experienced hands so that you don’t lose a penny while you are engaged elsewhere.
Contact Edelkoort Smethurst CPAs LLP in Burlington to Help You with Bookkeeping Needs
Talk to a professional accounting firm to discuss your requirements and how they can smooth the transition and scale operations as your business grows. At Edelkoort Smethurst CPAs LLP, our accountants and bookkeepers can provide services such as setting up an accounting system and recording transactions. To learn more about how Edelkoort Smethurst CPAs LLP can provide you with the best accounting and bookkeeping services, contact us online or by telephone at 905-517-2297.
