The Complete Guide To Outsourced Accounting: What to Expect, Where to Start, and More

You are a business that has seen some growth and suddenly the tax season rolls around. Now, all your resources and energy are focused on sorting tax deadlines, payroll, receipts, invoices, and spreadsheets. But maybe outsourced accounting can save you.

According to the Accountancy Age, micro-businesses spend around 15 hours per week (or about 60 hours per month) just to manage their overwhelming amount of accounting work. But, if businesses decide to hire outsourced accounting, they can save up to 70% on costs and meet tight taxation deadlines in mere minutes.

But, what can you expect from outsourcing accounting services? Here is our detailed guide to help you manage your expectations and understand how you can hire the right outsourced accounting provider.

Connect with Invedus for Experienced Outsourced Accountants

Invedus has been working for the past 10+ years to provide the best outsourced accounting services. They have been serving in more than 31 countries, such as the United Kingdom, United States of America, Netherlands, and more.

In 2024 alone, they have catered to about 100 and counting businesses globally to deliver reliable accounting services. Their specialty lies in IT accounting outsourcing, bank accounting outsourcing, and more.

If you want to finally find a trustworthy and highly skilled accountant who meets U.S. and global requirements, including expertise in GAAP, IFRS compliance, tax regulations, and financial reporting standards, choose Invedus for simple, effective hiring.

What Is Outsourced Accounting?

Imagine a person performing all your accounting tasks, without any overheads and additional leave demands, that is outsourced accounting. In technical definition, outsourcing accounting services are a set of tasks that you delegate to a third-party provider or firm. This approach allows businesses to offload some or all of their accounting functions, enabling them to focus on core operations and strategic growth.

Some important factors of outsourcing accounting are:

• Cost efficiency reduces expenses while maintaining high-quality financial services.
• Access to expertise ensures accurate reporting and compliance with regulations.
• Scalability allows businesses to expand without hiring additional accounting staff.
• Time savings enable focus on core business operations and growth.
• Advanced technology improves accuracy through automation and real-time reporting.
• Data security ensures financial information remains protected and confidential.
• Error reduction minimizes financial discrepancies and improves reporting accuracy.
• Customized solutions tailor services to fit specific business accounting needs.

What Are the Types of Best Outsourced Accounting Services?

Under the umbrella of financial responsibilities, there are many types of outsourced finance and accounting services. While you may be unsure of which service to get and begin, make sure you go through all of the services below and understand what all you want to delegate right from the start:

1. Bookkeeping

Ensures accurate tracking of daily transactions, income, and expenses, allowing businesses to focus on growth.

What It Includes:

• Maintaining general ledgers
• Reconciling bank statements
• Preparing financial records

Why It Matters:

As a highly repetitive yet essential task, outsourcing bookkeeping ensures compliance, accuracy, and efficiency, freeing up valuable time for strategic decision-making.

2. Tax Preparation

Ensures accurate tax filing and compliance while minimizing errors and penalties.

What It Includes:

• Filing taxes in accordance with local and federal regulations
• Ensuring compliance with changing tax laws
• Reducing errors to prevent costly audits

Why It Matters:

Outsourcing tax preparation lowers error rates by up to 30%, helping businesses avoid penalties and ensuring smooth, hassle-free tax compliance.

3. Payroll Processing

Handles salary calculations, tax deductions, and direct deposits while ensuring compliance.

What It Includes:

• Salary calculations and payment processing
• Tax deductions and benefit contributions
• Compliance with labor laws and regulations

Why It Matters:

Outsourcing payroll saves businesses up to 18% in administrative costs while ensuring employees are paid accurately and on time.

4. Financial Reporting

Provides accurate financial statements to help businesses assess their financial health.

What It Includes:

• Balance sheets and income statements
• Cash flow reports and financial summaries
• Data-driven insights for strategic decision-making

Why It Matters:

Outsourcing financial reporting improves accuracy by 25%, ensuring reliable data that supports better business decisions and long-term growth.

5. Strategic Financial Planning

Optimizes cash flow, investments, and long-term financial goals through expert analysis.

What It Includes:

• Budgeting and financial forecasting
• Investment management and risk assessment
• Trend analysis tailored to business needs

Why It Matters:

Businesses using outsourced strategic planning saw a 20% increase in profitability within two years, ensuring smarter financial decisions and sustainable growth.

6. Accounts Receivable (AR) and Accounts Payable (AP) Management

Ensures timely payments, efficient invoicing, and effective debt management for better cash flow.

What It Includes:

• Invoice processing and collections
• Debt management and expense reporting
• Handling vendor inquiries and payment reconciliation

Why It Matters:

Companies that outsourced AR/AP functions reduced payment delays by 35%, significantly improving cash flow and overall financial stability.

7. Auditing

Verifies financial records for accuracy and ensures regulatory compliance.

What It Includes:

• Verification of financial records and transactions
• Assessment of internal controls and processes
• Identification of discrepancies and potential compliance issues

Why It Matters:

Outsourced auditing reduces operational risks, with businesses reporting a 15% decrease in compliance violations by identifying discrepancies early.

8. Controller Services

Provides strategic guidance on financial operations, improving cash flow and compliance.

What It Includes:

• Cash flow analysis and financial oversight
• KPI reporting and performance tracking
• Ensuring policy adherence and regulatory compliance

Why It Matters:

Businesses outsourcing controller services reported a 30% improvement in operational efficiency, optimizing financial management and overall performance.

9. Cost Accounting

Analyzes production costs to optimize pricing strategies and improve profitability.

What It Includes:

• Analysis of production and operational costs
• Cost structure breakdown for better pricing strategies
• Detailed insights into profitability and overhead

Why It Matters:

Companies using outsourced cost accounting saw a 10–15% reduction in overhead expenses, leading to improved financial efficiency and profitability.

10. Management Information System (MIS) Reporting

Creates high-quality accounting reports to support better business decision-making.

What It Includes:

• Generation of detailed financial reports
• Analysis of key performance indicators (KPIs)
• Improved data accessibility for management teams

Why It Matters:

Firms outsourcing MIS reporting experienced a 20% improvement in decision-making speed, enhancing overall business efficiency and agility.

11. CFO Advisory Services

Provides strategic advice on financial operations, investments, and growth strategies.

What It Includes:

• High-level financial strategy and investment planning
• Guidance on business growth and scalability
• Improved financial transparency and reporting

Why It Matters:

Businesses using outsourced CFOs reported a 25–30% increase in investor confidence, thanks to enhanced financial transparency and expert strategic guidance.

12. Compliance Management

Ensures adherence to legal regulations while minimizing risks of penalties or lawsuits.

What It Includes:

• Monitoring regulatory changes across jurisdictions
• Implementing necessary adjustments in financial operations
• Ensuring ongoing compliance with applicable laws

Why It Matters:

Compliance outsourcing minimizes the risk of penalties or lawsuits, protecting businesses from costly legal issues and ensuring smooth, legally sound operations.

13. E-commerce Accounting Services

Provides specialized support for inventory management, sales tax compliance, and payment processing.

What It Includes:

• Inventory management tailored to e-commerce platforms
• Sales tax compliance across multiple jurisdictions
• Payment processing and transaction management

Why It Matters:

Outsourcing e-commerce accounting services ensures accuracy, compliance, and efficiency, allowing businesses to focus on growth and customer experience.

These are just some of the possible tasks an outsourcing accountant can perform for you. If you have some specific financial service requirement, you should directly share it with your third-party outsourced accounting firm.

Why Outsource Accounting Services Are In Demand by Businesses?

There are many reasons why a small business, entrepreneur, solopreneur, and other business model might choose to outsource accounting services. But here are the top reasons why outsourced finance services are in demand:

• Cost Efficiency: Outsourcing can save businesses money by eliminating the need for full-time in-house accounting staff, including salaries, benefits, training, and overhead costs. People can expect savings of up to 50%, for example, if an in-house accountant costs $6,000 per month, an outsourced professional could cost $3,000 for the same support.
• Access to Expertise: Businesses gain access to a team of seasoned professionals almost instantly.  The profiles can be catered to diverse specializations and up-to-date knowledge of accounting best practices and regulations. If they are looking for hyper-specialization, like in the IT or manufacturing industries, they may be getting access to at least 20–50 profiles daily for screening and selection.
• Enhanced Financial Reporting: Professional outsourced accounting firms typically offer more robust reporting and analysis tools. These tools can include real-time financial dashboards, automated bookkeeping systems, cash flow forecasting, tax compliance tracking, and customized financial reports.
• Focus on Core Business: By delegating accounting tasks, businesses can redirect internal resources and focus on core operations and strategic growth initiatives. This can ensure a growth of 112%, according to credible sources.
• Scalability and Flexibility: Outsourced accounting services can easily scale up or down based on business needs, without the hassle of hiring or laying off staff. Companies can scale by accessing specialized financial expertise 70% faster than traditional hiring methods.
• Strategic Financial Planning: Outsourced accountants can provide objective insights and proactive financial strategy planning, helping businesses make informed decisions for growth.
• Time Savings: By delegating complex and time-consuming accounting tasks to experts, businesses can save valuable time. This time savings becomes a direct investment, benefiting SMEs and entrepreneurs in the long run.

Benefits of Outsourcing Your Accounting

There are some benefits you can only get by outsourcing accounting to a third-party provider. Here are these exclusive benefits:

Scaling with Ease

Outsourced accounting services can easily scale up or down based on business needs, without the hassle of hiring or laying off staff. This allows companies to adjust their financial operations quickly during peak seasons or periods of growth.

Expertise at Your Fingertips

Third-party accounting firms provide access to a diverse pool of experienced professionals with specialized knowledge in areas like tax laws, compliance, and financial forecasting. This expertise is often broader than what a single in-house accountant can offer.

The Latest Tech Without the Cost

Outsourced accounting firms typically use the latest accounting software and tools, which may be too expensive for individual businesses to acquire and maintain. This gives companies access to advanced financial technologies without the associated costs.

Reducing the Risk of Fraud

External accounting provides an additional layer of oversight and accountability, minimizing the potential for internal fraud or unintentional errors. This separation of duties is harder to achieve with a small in-house team.

CFO-Level Guidance

Some outsourced accounting firms can provide CFO-level services, including financial modeling and strategic advice, which can be particularly beneficial for startups and small businesses that can’t afford a full-time CFO.

Industry Insights from Diverse Experience

Outsourced accountants often work across various industries, gaining broad insights that can translate into better service for your business. This cross-industry experience is difficult to replicate with in-house staff.

Continuous Financial Support

Unlike in-house teams, outsourced accounting services can often provide continuous coverage, ensuring that financial operations don’t halt due to staff vacations, illnesses, or turnover.

Where to Start in Financial Accounting Outsourcing Services

Outsourcing your accounting can be a strategic move to streamline operations and focus on core business activities. Here’s a step-by-step guide to help you get started:

Step 1: Assess Your Needs

Actionable Checklist:

• Identify Tasks to Outsource: Decide which accounting tasks you want to outsource, such as bookkeeping, payroll, or tax preparation.
• Consider Specialized Services: Determine if you need CFO-level consulting or other specialized financial services.
• Evaluate Your Business Size and Growth: Assess how your company’s size, industry, and future growth plans impact your outsourcing needs.

Interactive Tool:

Quick Survey/Assessment Template: Use this survey to assess your current financial needs and identify key tasks to outsource.

Step 2: Set a Budget

Actionable Tip:

• Estimate Costs: Calculate the costs of outsourcing based on the specific services you need, considering service fees and potential hidden costs.
• Focus on Value: While cost is important, prioritize the value you’ll receive from outsourcing (e.g., time savings, expert advice, scalability).
• Long-Term Perspective: Consider both short-term savings and long-term benefits, such as improved financial accuracy, operational efficiency, and future growth potential.

Interactive Tool:

Budgeting Calculator: Use this calculator to allocate your resources across the various services you plan to outsource. It will help you balance cost with service quality.

Step 3: Research Potential Providers

Actionable Advice:

• Industry Experience: Look for providers who have experience working in your specific industry, as they will understand your unique needs and challenges.
• Certifications and Accreditations: Ensure the provider has relevant certifications such as CPA, ACCA, or other recognized industry standards.
• Technology and Tools: Check if they use modern, up-to-date accounting software and automated solutions to streamline processes and improve accuracy.

Interactive Tool:

Provider Comparison Worksheet: Use this worksheet to evaluate different providers based on key factors such as industry experience, pricing, certifications, and technology. This will help you shortlist the most suitable partners.

Step 4: Assess Provider Capabilities

Actionable Steps:

• Range of Services: Ensure the provider offers the full range of services you require, whether it’s bookkeeping, payroll, tax filing, or CFO-level consultation.
• Expertise and Adaptability: Assess whether the provider stays up-to-date on industry changes, financial regulations, and best practices. Their adaptability to new challenges will be crucial as your business evolves.
• Use of Technology: Evaluate whether the provider leverages advanced accounting software, automation tools, and data analytics to improve efficiency and accuracy.

Interactive Tool:

Provider Capabilities Checklist: Use this checklist to ensure that each potential provider meets your requirements in terms of services offered, expertise, and technology used.

Step 5: Verify Compliance and Security

Actionable Insight:

Regulatory Knowledge: Verify that the provider understands relevant tax laws, accounting standards (e.g., GAAP, IFRS), and compliance requirements.

Adaptability to Changes: Ensure that they can adapt to changes in tax laws, financial regulations, and industry standards. This is crucial to avoid future legal or financial issues.

Data Security: Assess the provider’s data protection measures and privacy protocols. Look for providers with strong security practices, such as encryption, secure data storage, and strict access controls.

Interactive Tool:

Compliance and Security Checklist: Use this checklist to evaluate potential providers based on their compliance knowledge and data security measures. Ensure that they have the proper safeguards in place to protect your sensitive financial data.

What to Expect When Outsourcing Accounting Work?

If it’s your first time outsourcing in accounting, there are certain factors that you should look out for. These are things that your financial accounting outsourcing services should provide regardless of your budget or business size. Here are the factors you should look for and the pros and cons in regards to outsourcing accounting:

Expertise and Specialization

Outsourcing accounting tasks gives businesses access to a team of experienced professionals specializing in accounting, tax regulations, and industry-specific nuances, ensuring accurate financial reporting and compliance. 

These outsourced accounting teams reduce errors and improve financial decision-making. With 90% of CFOs outsourcing at least some accounting functions to combat talent shortages, businesses can rely on expert knowledge that would be difficult to maintain in-house.

Pros:

• Dedicated financial management experts
• In-depth knowledge of tax laws and compliance
• Industry-specific insights for better financial decision-making

Cons:

• May require time to integrate the outsourced accounting department with internal teams

Cost Efficiency

Outsourcing accounting services allows businesses to save money by eliminating the need for hiring, training, and maintaining an in-house team. The reduction of overhead costs, such as software, infrastructure, and employee benefits, provides an opportunity to allocate resources more effectively. 

As a result, companies can benefit from 30-50% cost reductions while scaling operations efficiently. According to reports, 70% of businesses outsource accounting to reduce operational expenses.

Pros:

• No need for full-time employees during slow periods
• Savings on salaries, benefits, and office space
• Flexible scalability to match business needs

Cons:

• Initial transition costs to set up outsourced accounting systems

Growth and Strategic Focus

By delegating accounting tasks to an outsourced accounting firm, businesses can free up internal resources to focus on strategic growth activities like innovation and market expansion. This delegation enables leaders to concentrate on their core business while relying on outsourced finance and accounting experts for daily financial tasks. 

65% of companies report that outsourcing accounting helps them focus on primary business activities, driving growth opportunities.

Pros:

• More time for innovation and strategic planning
• Relieves staff from daily accounting duties
• Enables agility in pursuing growth opportunities

Cons:

• Requires seamless collaboration between in-house and outsourced accountants

Streamlined Processes

Outsourced accounting services use advanced tools and technologies to streamline financial operations. These providers ensure efficient transaction processing, accurate reporting, and seamless integration with your business systems. 

This leads to faster decision-making and reduced errors. As the financial and accounting outsourcing market is projected to reach $70.19 billion by 2025, businesses are increasingly choosing outsourced accounting services to stay competitive.

Pros:

• Implementation of modern accounting software
• Efficient transaction processing
• Integration with your business’s tech stack

Cons:

• The learning curve for adapting to new systems and processes

Data Security

Outsourced accountants prioritize robust data protection measures to secure sensitive financial data. With encrypted communication channels and adherence to industry standards, outsourced accounting firms ensure your financial information remains safe and compliant with regulations. 

As 83% of small businesses plan to maintain or increase their spending on outsourced services, it is clear that businesses value the security and data privacy offered by professional outsourced accountants.

Pros:

• Robust data protection protocols
• Secure file-sharing platforms
• Compliance with regulatory standards

Cons:

• Dependency on the provider’s security measures

Ongoing Support

Outsourced accounting services provide continuous support by handling daily tasks like bookkeeping, reconciliations, and financial reporting. They also offer strategic insights into budgeting, forecasting, and compliance updates. 

This ongoing assistance allows businesses to stay on track and focused on their goals. According to industry data, outsourcing accounting work can lead to 10-30% improvements in organizational efficiency, ensuring businesses run more smoothly.

Pros:

• Regular financial updates and reports
• Assistance with budgeting and forecasting
• Proactive compliance management

Cons:

• Potential delays in communication due to time zone differences

Worth Reading: Outsourced Accounting for Startups and Small Business

Cost of Outsourced Accounting Bookkeeping Services

Cost is a very big factor for many small to medium-sized businesses. According to a Deloitte 2020 survey, 70% of businesses choose outsourced accounting services because of cost savings. This is proof that all businesses first focus on the cost of an outsourced accountant.

But as a company, maybe your priority is to source a local resource rather than outsourcing accountant for work. We researched and found the hourly rates of all popular outsourcing countries, so you can compare data points before considering an outsourcing accounting firm.

United States

• Average hourly rate: $20-$30
• Monthly cost range: $500-$5,000 for small businesses
• Baseline: $100 to $500+ per hour for US-based accountants

Philippines

• Hourly rate: $8.50-$10.00
• Monthly cost for full-time employee: $1,360-$1,600
• General range: $14 to $49 per hour

India

• Hourly rate: $8-$12
• Cost savings: 40-60% compared to US rates
• Basic bookkeeping: $15 to $50 per hour
• Specialized services (e.g., tax preparation, financial analysis): $50 to $100 per hour

Latin America

• Hourly rate: $8-$18

United Kingdom

• General hourly rate: £80-£100 (approximately $100-$125)
• Ad hoc services: £11 to £14 per hour (approximately $14 to $18)

Poland

• Hourly rate: $50 to $149 per hour

Malaysia

• Hourly rate: $25 to $59 per hour

Brazil

• Approximate hourly rate: $65 per hour (for software development, indicative of professional services)

Eastern Europe (General)

• Hourly rate: $30 to $50 per hour

According to this data, it is very clear that India leads the space when it comes to affordable and high-quality accounting services. Data from NASSCOM and KPMG India accounts for the world’s largest accounting workforce, with over 10 million accountants and bookkeepers. They also contribute to 50% of the global accounting outsourcing market. 

It becomes clear that India is the only country you should trust when it comes to outsourced finance and accounting work. If you want to find the best outsourced accounting firm in India, you don’t have to look further, just hire Invedus Outsourcing as your partner.

Also read: Cost of an Accountant for a Small Business

Best Practices for Delegating Outsource Accounting Work or Tasks?

For those who have outsourced accounting before and those who haven’t, certain practices can make the process more effective. Following these practices helps in delegating the right tasks to an outsourced accountant.

• Clear Communication and Expectations: Always ensure you have clear communication channels and establish expectations moving forward.

• Strategic Task Delegation: Routine tasks should be your priority in delegating and also reports and financial analysis should be a must for your outsourced accountants to deliver.

• Careful Provider Selection: Research and look for Invedus Outsourcing, so you know you have the support of a trusted partner with 10+ years of experience in outsourced accounting work.

• Technology Integration and Security: From your end, always start implementing robust security measures like data encryption and safe data-sharing platforms for safekeeping your data.

• Performance Monitoring and Quality Control: Work closely with your outsourcing partner, Invedus, and start monitoring everything and expect detailed reports from us at every step.

• Workflow Management: Always keep an oversight on the quality of the work you are receiving as it should always match your expectations and get translated into a streamlined process.

Common Mistakes to Avoid in Accounting Outsourcing

Companies may be led by skilled professionals with diverse expertise, but outsourcing presents unique challenges. To avoid common pitfalls, follow the carefully curated list below.

Mistake 1: Not Defining Clear Objectives

Failing to outline expectations can lead to misalignment and inefficiencies.

How to Fix: Clearly define your outsourcing goals, including tasks, performance metrics, and expected outcomes.

Mistake 2: Lack of Proper Due Diligence

Not researching a provider’s credentials and experience can result in poor service.

How to Fix: Check reviews, client testimonials, certifications, and industry experience before finalizing a provider.

Mistake 3: Poor Communication and Collaboration

Lack of regular updates and unclear instructions can lead to errors.

How to Fix: Set up a clear communication plan, schedule regular check-ins, and use collaborative tools for transparency.

Mistake 4: Not Using the Right Technology

Incompatibility with your accounting software can cause integration issues.

How to Fix: Choose a provider that uses modern, compatible accounting software that integrates seamlessly with your systems.

Mistake 5: Lack of Scalability Planning

An outsourcing provider that can’t grow with your business can create disruptions.

How to Fix: Work with a firm that offers scalable solutions to adapt to your evolving business needs.

Mistake 6: Neglecting Regular Reviews and Audits

Not reviewing outsourced work can result in unnoticed errors and inefficiencies.

How to Fix: Conduct periodic assessments of your outsourced accountant’s performance and financial reports to ensure accuracy.

Summarizing

When it comes to outsourcing accounting, you can never be too careful. Understanding that finance can have risky outcomes is so important. So, outsourcing accounting can be a great way for you to support your internal teams without straining employees.

We have provided you with this complete guide, so you can easily make decisions for your business especially when it comes to internal work cycles. Choose trusted outsourced accounting firms, such as Invedus Outsourcing to get precise accounting work within your deadlines.

Invedus: Your Partner for Quality Outsourced Accounting Services

Fear of losing financial control and taxation issues are a reality for many small businesses and solopreneurs. While they choose to hire locally, they often face budget overruns that put a strain on stakeholders to make unwanted decisions.

Invedus Outsourcing understands the responsibility of financial accounting outsourcing and offers outsourced accountants who follow GAAP (Generally Accepted Accounting Principles), IFRS (International Financial Reporting Standards), FASB (Financial Accounting Standards Board) regulations, and IRS Compliance (U.S.), GDPR (General Data Protection Regulation – EU), PCI DSS (Payment Card Industry Data Security Standard) compliances.

You can start by sharing your requirements and go straight into screening employees to find a reliable outsourcing accountant within 48 hours*. 

Click here to schedule a call with Invedus or visit the here for more details.