7 Reasons Why Accounting firms need to offer Finance, Accounting & Back Office Outsourced Services

In today's highly competitive business landscape, accounting firms face increasing pressure to deliver more comprehensive and specialized services to their clients. By offering finance, accounting & back office outsourced services, these firms can meet the growing demand for cost-effective and efficient solutions that go beyond traditional accounting and tax services.

Business process outsourcing enables accounting firms to expand their service offerings and cater to a broader range of client needs. By leveraging F&A outsourcing services, accounting firms can provide clients with a comprehensive suite of finance & accounting outsourcing services, including bookkeeping, financial analysis, payroll management, accounts payable and receivable, and more. This diversification helps accounting firms attract new clients and strengthens their existing client relationships by becoming a one-stop solution provider. Clients appreciate the convenience of having all their financial and back office needs met by a single trusted partner, rather than engaging multiple service providers.

Moreover, outsourcing these functions allows accounting firms to tap into specialized expertise and resources. They can leverage a pool of skilled professionals with deep knowledge in various industries and financial disciplines. This expertise is particularly valuable for clients who may need more resources or expertise to maintain an in-house accounting department. By accessing specialized talent through outsourcing, accounting firms can offer their clients more accurate financial reporting, strategic insights, and guidance on financial decision-making.

Additionally, finance, accounting & back office outsourced services provide scalability and flexibility to both accounting firms and their clients. Businesses can easily adjust the level of services they require based on their changing needs. During periods of growth or increased workload, outsourcing allows clients to quickly scale up their financial and back office operations without the burden of hiring and training additional staff. Conversely, clients can downsize their outsourcing services to optimize costs during leaner times or seasonal fluctuations. This flexibility helps businesses adapt to market dynamics while ensuring they have the necessary financial support to make informed decisions and drive growth.

1. Easy To Scale:

Indeed, accounting and bookkeeping services are in high demand across various industries, and businesses require them continuously throughout the year. While specialized knowledge and skill sets may be necessary for certain complex accounting tasks or specialized industries, the core business process outsourcing services are generally applicable and do not require highly specialized expertise.

This broad applicability and consistent demand make scaling these services relatively easier compared to industries that rely heavily on niche expertise. Accounting firms can expand their finance & accounting outsourcing service offerings and accommodate a growing client base by leveraging technology, efficient processes, and skilled professionals. Additionally, advancements in cloud-based accounting software and automation tools further facilitate scalability by streamlining workflows and enhancing efficiency.

The recurring nature of accounting and bookkeeping services allows for predictable revenue streams, making it easier for accounting firms to plan and scale their operations. As businesses of all sizes require these back-office outsourcing services, there is a vast market to tap into, providing ample opportunities for growth and expansion.

However, it is still crucial for accounting firms to maintain a high level of quality, accuracy, and compliance while scaling their services. Ensuring adequate resources, continuous professional development, and adapting to changing regulatory requirements are key factors in successfully scaling accounting and bookkeeping services.

These services don't require specialized knowledge and skill sets and also every business needs these services on an ongoing basis, round the year. And hence it’s easy to scale finance, accounting and back office outsourcing services.

2. Healthy Margins:

By strategically utilizing technology and F&A outsourcing services, a remarkable profit margin of over 50% can be achieved in the tax and audit services sector. This can be accomplished by maintaining a strategic onshore: offshore team ratio of 1:10. Such an approach enables the optimization of costs while ensuring high-quality service delivery through efficient resource allocation and utilization. Leveraging advanced technologies like cloud computing, data analytics, and automation tools streamlines processes, reduces manual labor, and increases productivity.

Offshore teams, with their cost advantages, can handle repetitive tasks and routine processes, freeing up onshore teams to focus on higher-value activities and client interactions. Through proper training, communication, and standardized processes, seamless coordination between onshore and offshore teams can be established. This combination of technology, offshore resources, and streamlined operations allows for exceptional profit margins while delivering superior tax and audit services.

3. Low Risk:

Tax services and audit services are heavily regulated by both the American Institute of Certified Public Accountants (AICPA) and the Internal Revenue Service (IRS). These regulations aim to ensure compliance with tax laws and maintain the integrity of financial reporting. The strict oversight in these areas is necessary to minimize the potential for litigation and protect against legal risks.

In contrast, back-office outsourcing services, although still required to adhere to applicable standards, generally face less regulatory scrutiny compared to tax and audit services. While compliance remains important, the reduced level of regulatory oversight translates into a relatively lower risk of litigation for providers of outsourced accounting and bookkeeping services.

This distinction is primarily due to the specialized nature of tax and audit services, which involve complex regulations and requirements. The AICPA and IRS impose stringent rules to uphold the quality and accuracy of these services, ultimately safeguarding clients and the public interest. Meanwhile, outsourced finance and accounting services, while essential for maintaining accurate financial records, typically do not carry the same level of regulatory burden or potential for legal consequences.

4. MRR (Monthly Recurring Revenue):

Clients often rely on tax, audit, and accounting services on a recurring basis, providing a stable monthly revenue stream for accounting firms. By offering comprehensive finance & accounting outsourcing services, firms can build long-term relationships with clients, ensuring a consistent and predictable revenue flow. This stability allows firms to plan and allocate resources more effectively.

Moreover, by becoming an integral part of the client's financial operations through finance, accounting & back office outsourced services, the accounting firm gains a deeper understanding of their client's business. This understanding opens doors for building advisory services with offshore staffing, leveraging the firm's expertise to provide strategic guidance and solutions.

These ongoing relationships not only solidify the firm's revenue but also enhance client loyalty and trust. Clients benefit from the convenience and expertise of having a dedicated F&A team, while the firm expands its service offerings and revenue potential. Overall, offering comprehensive F&A outsourcing services fosters mutually beneficial long-term partnerships between accounting firms and their clients.

5. Less Involvement:

To ensure effective client management, it is recommended to assign experienced managers both onshore and offshore to handle client accounts continuously. After the initial onboarding and settling process, these managers take over the day-to-day operations, allowing you to shift your involvement to a periodic basis. This delegation enables efficient client servicing while granting you the opportunity to focus on strategic advisory roles.

By appointing dedicated managers, clients receive consistent and attentive support, fostering strong relationships and trust. These managers act as the main point of contact for clients, ensuring timely communication and problem resolution. With their expertise, they can handle routine tasks, freeing up your time to take on higher-level responsibilities within the firm.

This approach not only streamlines client management but also maximizes your effectiveness as a strategic advisor. By periodically engaging with clients, you can provide valuable guidance and support, leveraging your expertise to drive their financial success. Overall, this model optimizes client management, enhances client satisfaction, and enables you to prioritize crucial responsibilities within the firm.

6. Less Clients More Revenue:

Indeed, it is possible to generate substantial revenue by serving a relatively small number of clients within a specific revenue range. For businesses with annual revenues ranging from $2 million to $10 million, accounting firms can typically charge monthly fees ranging from $5,000 to $30,000.
By providing high-value finance, accounting & back office outsourced services tailored to the specific needs of these clients, CPA firms can maximize their profitability. With the right pricing strategy, efficiency, and effective client management, it is possible to achieve a million-dollar practice by serving just 5 to 6 clients and working fewer than 1,000 hours per year.
This approach emphasizes the importance of focusing on quality clients and delivering exceptional service, rather than solely relying on a high volume of clients. By providing specialized expertise and personalized attention to a select group of clients, accounting firms can create significant value and generate substantial revenue while maintaining a manageable workload.
Revenue that can be generated by services clients from $2 Million to $10 Million revenue can be anywhere from $5K to $30K a month.  You don’t need a ton of client to build a million dollar. As we say “You can build a Million dollar practice serving 5 to 6 client working less then 1000 hours a year.”

7. Higher Client Dependence - Higher Fees:

Providing services that allow for close collaboration with clients, such as accounting and bookkeeping, indeed creates opportunities to build personalized and long-term relationships. By working closely with clients, understanding their unique needs, and delivering exceptional service, the accounting firm becomes a trusted advisor. As the client develops a reliance on the firm for more than just one service, such as financial consulting, tax planning, or business advisory, the firm gains pricing power. 

The client recognizes the value of the comprehensive support and expertise provided by the firm and is willing to pay premium rates for the bundled services. This strengthens the firm's position in negotiations and enables them to command higher pricing based on the depth of the relationship and the range of services offered. 

The personalized and long-term relationships fostered through close collaboration create a sense of trust, loyalty, and dependency between the accounting firm and the client. This not only increases the firm's pricing power but also enhances client retention, leading to stable and recurring revenue streams over an extended period.

Outsource Finance, Accounting & Back Office Services to Entigrity

Offering Finance, Accounting & Back Office Outsourced Services benefits accounting firms by diversifying their services and attracting new clients. The scalability and flexibility of these services enable firms to adapt to changing business needs and optimize costs. 

By leveraging technology and offshore staffing, CPA firms can boost their profitability. The reduced regulatory burden minimizes legal risks compared to tax and audit services. The recurring nature of these services provides stable revenue streams and allows firms to deepen client relationships. Delegating day-to-day operations and fostering long-term relationships lead to higher fees and increased pricing power, driving growth and stability for accounting firms.

Outsourcing your back-office accounting tasks can revolutionize your business and give you a competitive edge. CEOs and firm owners can save significant cost and time by partnering with a reliable accounting, finance, and back office service provider like Entigrity. These savings can then be reinvested into exciting new initiatives that fuel future growth. Additionally, outsourcing allows for seamless access to higher-quality financial information, which is crucial for making informed business decisions. However, before starting the process firms should know the best practices of offshoring.

At Entigrity, we strive to be the perfect match for your business's outsourcing needs. Our team of outsourced bookkeeping, accounting, and back office professionals are highly skilled and well-equipped to handle all of your accounting and finance requirements. We've got you covered, from efficiently closing the books each month to providing invaluable support during M&A transactions.

If you're ready to explore the benefits of outsourcing your back-office accounting functions, schedule a call with Entigrity today. Let us help you optimize your business's financial processes while you focus on driving growth and success.