Internal vs. Outsourced Bookkeeping for Small Businesses

June 13, 2024

by a searcher

As I approach 90 days since acquiring my first business I'm reevaluating our financial management structure. Currently, we have a controller on staff who handles our bookkeeping, but I believe this might be overkill for the volume of transactions in our business. Revenues near $4MM and a staff of 12.

I'm considering whether we could save a significant amount of money by outsourcing our bookkeeping to an accountant's office or even offshoring it. However, I want to ensure we don't upset our company culture or lose efficiencies in the process.

I'd love to hear from others about their experiences and thresholds for making these decisions:

At what revenue or transaction volume do you see the need for an internal controller vs. outsourced bookkeeping?
Have you transitioned from internal to outsourced bookkeeping or vice versa?
What impact did it have on your company's culture and efficiency?
Are there specific challenges or benefits you've encountered with outsourced or offshore bookkeeping?
Your insights and experiences would be greatly appreciated as I navigate this decision.

Thank you in advance for your input!

Reply by a searcher
from Emory University in Tucson, AZ, USA

The need for an internal controller or bookkeeper depends on various factors, including business type, transaction volume and complexity, financial analysis requirements, and accounts receivable management.

With modern accounting tools like QuickBooks and automated connectivity to bank registers, credit cards, ACH payments, payroll, cash forecasting tools, etc., managing books internally can be efficient. My partner has handled our accounting, and it has allowed us to maintain control and hasn't been detrimental to our business. (Nearly every business we've examined, regardless of volume or type, doesn't necessarily require a full-time bookkeeper - it's often a matter of owner choice, dependent on time and skills, rather than a strict business need.)

Consider how your time is best spent creating value for your business. Outsourcing to an accountant's office may add value, but it's crucial to evaluate whether it's more or less work for your business - after all, you'll need to transmit everything to the bookkeeper versus dropping it on the in-office desk. Are you going to process the books quickly or let things pile up? Do you need reports instantly or advanced financial analysis, such as financial modeling?

If you're considering outsourcing, you could start by making the transition now and temporarily taking on some additional work to identify your specific financial management needs. (Keep it domestic, however, as offshoring can be more work.)

Reply by a professional
in Philadelphia, PA, USA

Good question. It depends what the controller actually does. Do you have a manageable/measurable job description? Probably includes A/P and A/R, payroll. If this is all then maybe you can outsource it or downsize to a bookkeeper. Some new owners try to take it on themselves initially since they often have a finance background and find it as a good way to sink their teeth into the day-to-day if they are not an owner-operator with unique skills. I did this and found if very helpful. However, if your controller is also performing HR, purchasing, insurance, legal and/or other activities that can fill up a day, they an internal resource may be worth the price. If you do not give this role the appropriate respect, it will become a major distractor for you very quickly. I can say this from personal experience... good luck!

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