Why Outsource Accounting Services: The Strategic Advantage for Growing Startups

When many leaders think of outsourcing certain services, they see it mainly as a cost-cutting measure or a way to conserve costs in the early days of a startup’s tenure. However, outsourcing certain services — like accounting — offers many benefits beyond cost savings. In fact, when your startup outsources its accounting services to a qualified professional, you’re also gaining a strategic partner that can help your financial decision-making, fundraising and financial organization.

Graphite Financial is a full-service accounting firm specializing in helping startups grow and prosper, from seed funding to exit. With experience supporting startups in every industry and market, we’re standing by and ready to help your venture-backed startup with all of its accounting needs.

The Evolution of Outsourced Accounting: From Basic Bookkeeping to Strategic Finance

Outsourced accounting represents more than just a traditional bookkeeping relationship, but a comprehensive, strategic partnership. Today, a good outsourced accounting partner will cater to your startup’s unique and more sophisticated needs, using technology and advanced systems to navigate an increasingly complex financial landscape.

A good outsourced accounting partner should serve as a true extension of your startup, and have the right mix of technical expertise and financial planning prowess to help you meet your financial goals and scale into the future. Some key attributes a good outsourced accounting partner should have include:

• Expert, specialized knowledge of your industry and your startup’s needs and challenges.
• Knowledge of accounting standards and regulations.
• Access to advanced technology to streamline accounting and cash flow management.
• Ability to customize or adapt service offerings relative to the startup’s needs at a specific time.
• Financial planning and forecasting expertise.

Core Benefits of Outsourcing Accounting Services

One of the biggest advantages of working with a qualified accounting professional is having expert service available when needed. However, there are several other key benefits to outsourcing accounting services. These include:

• Scalability and focus: Beyond cost savings versus bringing a professional accountant in-house, an outsourced professional can tap into your startup’s unique needs to help meet its financial goals. A good partner can scale along with your startup, providing value-added service from the early stages through seed and Series A fundraising through exit.
• Fundraising assistance: Venture-backed startups must raise funds to help their startup take the next step in their evolution. Preparing for fundraising rounds and investor due diligence with Series A funding can be challenging. A good partner can help ensure your finances are organized and detailed and comply with any industry or accounting regulations to streamline fundraising efforts.
• Other quantifiable key benefits: Cost savings from outsourcing is hardly the only measurable benefit. Time savings is another benefit that’s often overlooked by startup leadership. When you outsource accounting services, you’re taking the responsibility away from other employees, thereby giving them more time to work on growing the startup. At the same time, you can ensure that financial experts are properly managing your startup.

Access to Specialized Expertise Without Full-Time Investment

Arguably, the most significant benefit of outsourcing your startup’s accounting is that you’ll have access to experts without having to pay a premium price. Consider this: The average salary of a full-time CFO is in the hundreds of thousands of dollars, a bookkeeper about $60,000 and a controller anywhere from $75,000 to $150,000. Outsourcing your accounting is a fraction of this. More specifically, Graphite’s accounting service packages start at $1,250 per month.

What’s more, you can gain access to financial experts with experience in your industry when you outsource. Another advantage of working with an outsourced partner is that they can better approach things from a neutral perspective. Unlike an in-house accounting team who might be more resistant to confront leadership, an outsourced partner can often be better equipped to tell you what you need to hear and not necessarily what you want to hear.

Scalability That Grows With Your Startup

An outsourced accounting partner isn’t just designed to serve as a temporary solution for your startup. A good outsourced accounting firm will be a long-term strategic partner that can grow and scale its services as your startup advances. While your startup may only require basic bookkeeping initially, it’s likely to need more complex financial modeling as it grows and evolves. A good outsourced partner can provide all of these solutions to your startup and scale along with your startup’s growth, truly serving as an extension of your operations.

For example, though Graphite’s base package starts at $1,250 per month, we also offer higher service tiers for when you need more robust, comprehensive coverage. Upgrading to a higher service plan is often more cost-effective than hiring additional professionals to work in-house.

Strategic Advantages of Outsourcing Finance and Accounting Services

Outsourcing your finance and accounting services is more than a way to conserve costs or improve operational efficiency — it’s a long-term strategic business decision. From basic bookkeeping to working with a fractional CFO to help manage your finances, accounting is more than just checking a box; it can serve as a competitive advantage. Good accounting and bookkeeping can help forecast revenue, set budgets and help leadership make more informed decisions about the startup’s future.

Enhanced Financial Accuracy and Compliance

Accurate financial reporting is essential for several reasons:

• It ensures you’re complying with any standards or regulations.
• It helps build trust and transparency with investors and other stakeholders.
• It allows leadership to make more informed decisions.

While DIY accounting may suffice for a limited time in a startup, it’s also likely to result in poor record-keeping, missed deadlines, poor financial health, ineffective financial management and a greater risk of legal penalties as your operations become more complex. A good partner meets GAAP compliance requirements and can help have your finances properly organized and audit-ready.

Technology Integration and Modern Financial Infrastructure

Another benefit of working with a professional services provider is the number of resources they have at their disposal. Good accounting service providers use modern accounting software that can integrate with your current platforms to streamline operations further. This can help provide real-time visibility and enhanced financial reporting while improving collaboration and transparency.

Why Outsource Accounting and Bookkeeping: Industry-Specific Considerations

As you weigh different outsourced accounting partners, be sure to work with a firm with experience in your industry. If you work with Graphite, we’ll be sure to pair you with an accounting team with experience in your industry, whether it’s SaaS, eComm, HealthTech or another field.

Industry-specific experience is important for understanding the market landscape and meeting any unique compliance or financial reporting requirements. Specialists who can do more than balance the books but know each specific industry’s ins and outs can add more value to an outsourced partnership.

The Right Time to Outsource: Recognizing the Signals

So when’s the right time to outsource accounting? Consider the following:

• When your startup is in a period of rapid growth.
• When the finances and bookkeeping have become too complex for you to handle in-house any longer.
• When you’re preparing for fundraising rounds.

Many startup leaders are concerned about outsourcing. Some of the main concerns include losing control over their finances, communication challenges, cultural fit and security risks. These concerns can typically be alleviated by ensuring that you’re working with the right partner, underscoring the importance of selecting who you work with wisely.

Pre-Funding and Fundraising Preparation

Accounting can help ensure financial accountability and transparency and allow leaders to make better decisions about resource allocation. This can all help with fundraising preparation and building relationships with investors.

An outsourced partner can also help your startup prepare for investor due diligence, the investigation and analysis investors conduct before committing to an investment. Throughout the due diligence process, investors carefully assess your startup, verifying financial records, legal documents and other relevant data.

Rapid Growth and Scaling Challenges

Outsourced accounting is designed to support your startup through all growth phases and the varying complexities of each phase. From establishing a strong financial foundation to improving financial reporting and conducting strategic financial planning, an outsourced partner is designed to serve as an extension of your startup.

Choosing the Right Outsourced Accounting Partner

Selecting the right outsourced accounting partner isn’t much different from choosing any partner. Here’s a look at some factors to weigh:

• Professional accounting experience
• Market experience
• Communication preferences
• Meeting cadence
• Cultural fit

Essential Qualifications and Experience

Beyond the basics, there are various essentials that you’ll want to make sure your accounting partner hits. These include:

• Industry-specific experience working with venture-backed startups.
• Professional qualifications and certifications.
• A proven track record of success working with startups.
• Accessibility and responsiveness.
• The ability to scale services.

Implementation and Onboarding: Setting Up for Success

A good outsourced accounting partner will strive to make the transition as fast and as easy as possible for your startup so they can begin to provide their services faster. At Graphite, we pair our new clients with an onboarding manager to streamline the process and help with data migration. In most cases, we’re fully onboarded within a few weeks.

Establishing Effective Communication and Collaboration

It’s also important to set some ground rules with your accounting partner. For instance, you’ll want to outline communication and meeting cadence to stay connected and collaborative. You should also discuss how frequently you want to see financial reports and performance metrics. Sometimes, your startup may have in-house team members that you want your outsourced partners to work with. Make sure you set guidelines for that working relationship as well.

Transform Your Financial Operations with Strategic Outsourcing

Are you ready to transform your startup’s financial operations and gain a strategic partner that can help establish new competitive advantages? Contact Graphite today to schedule a consultation. As a leading startup accounting firm, we’ve partnered with hundreds of startups spanning various industries to help them grow and become successful. Contact us today for more information and to get started.

FAQs

What’s the difference between outsourced accounting and traditional bookkeeping services?

Traditional bookkeeping services are typically performed in-house by a professional whom your startup hires. Outsourced accounting, conversely, involves working with an external partner for your bookkeeping and accounting needs. While there are advantages to having in-house professionals handling your bookkeeping, working with outsourced accounting solutions like an experienced external partner can ensure high-level performance at a fraction of the cost of hiring a full-time employee.

How quickly can we transition from DIY accounting to outsourced services?

While there’s always some transition period, we’re dedicated to doing this quickly to begin providing service for you faster. When you work with Graphite on outsourced accounting services, you can ensure we’ll pair you with an onboarding manager to streamline this transition so we can begin providing value to your startup.

Will outsourcing accounting services affect our control over financial data?

While entrusting your financial information to your outsourced partner, remember that the buck still stops with you. You’re hiring the partner to perform a job, so you still call the shots on how much or little control your partner will have.

What level of expertise can we expect from an outsourced accounting team?

A good outsourced accounting firm consists of financial professionals who also have experience in your startup’s industry of operation. Bottom line: You can expect high-level expertise from your outsourced team.

How do outsourced accounting costs compare to hiring in-house staff?

Outsourced accounting costs are a fraction of what it would take to hire an in-house staff. For instance, at Graphite, our accounting services packages start at $1,250 per month. That’s a significant savings compared to the salaries that a CFO, bookkeeper or controller would command.

Can outsourced accounting services scale with our startup’s growth?

Yes, that’s one of the biggest benefits of working with an outsourced team — they can grow and scale their services as your startup evolves. This also will help your startup get timely financial reporting with their access to top accounting software.

How do you ensure data security and confidentiality?

At Graphite, an internal security team helps keep our clients’ data safe and secure. We take data security very seriously and enforce extra measures to keep confidential data safe.

What happens if we decide to bring accounting functions back in-house?

We understand that eventually you may choose to hire in-house staff. We’re happy to help you transition back to in-house. We’re also pleased to work in tandem with in-house professionals to offer an even more comprehensive service.

How does outsourced accounting support fundraising and investor relations?

Outsourced accounting support can help ensure financial credibility and transparency, minimize risk and help prepare for fundraising rounds. A good partner can also help create pitch decks, financial models and assist with presentations to put your startup in a good position to secure funding.

What integration capabilities do you offer with existing financial systems?

We work to integrate your existing data and financial platforms with our more advanced financial systems to ensure we can utilize them.