Outsourcing expert and blogger, Bill Gerber wrote in his blog last week that — “Although some businesses are hesitant to use an outsourced accounting department, the business model is growing in popularity. As business owners see the many advantages of the arrangement, their reluctance fades. Outsourced accounting departments are on their way to becoming the standard rather than the exception.”
The Parallel with Outsourced Payroll
Virtual accounting departments have their roots in outsourced payroll functions. Years ago, most companies would never have considered moving payroll functions outside the company. Payroll involves sensitive company data. They feared a payroll service would steal vital company information and sell it to their competitors. Third-party payroll services fought against myth and misinformation for years.
The gloomy predictions never came true. Payroll offices maintained strict confidentiality and payroll security. The data was never compromised and sensitive financial information was protected. Once organizations saw past the illusion of insecurity, they realized outsourcing payroll functions saved them money and allowed them to operate more efficiently. Today, payroll is commonly handled by third-party vendors and few organizations consider privacy breaches to be a possibility.
Outsourced Accounting Departments Face Similar Challenges
The business of outsourced ‘virtual’ accounting is going through the same evolution in customer perception. Executives are reluctant to give up control of daily financial functions and worried about the possibility of security breaches. With the increased public attention to data theft, businesses are concerned with the safety of financial statements handled by a virtual accounting department.
Yet there is no evidence that outsourced accounting departments are less secure than internal ones. In fact they are often more secure as the encrypted transmissions, protected servers and regular data backups provide more data protection than the average business has. Client trust is vital to a virtual accounting department. While a data security breach might hurt the client, it would devastate the accounting provider as they lose clients who no longer believed their data was safe.
Finding the Right Accounting and Bookkeeping Services Provider
As modern business sees the overwhelming advantages of using a virtual accounting department, the number of accounting providers is growing. In order to find the best provider, examine the qualifications of prospective vendors carefully.
A good virtual accounting department should employ experienced bookkeepers and accountants. All transactions should be overseen by an accountant — not just a head bookkeeper. Accounting and bookkeeping services are different and clients should get both. The provider should practice Generally Accepted Accounting Practices.
Although accounting experience is important, the provider should have experience with accessible and secure online transactions. Clients need access to their data 24/7 but only authorized personnel should be able to connect and only through secure channels. Data must be backed up regularly. Servers need not only data protection such as firewalls or virus scanners but must also guard against physical intrusions or natural disasters.
Once an organization finds the right accounting services provider, they have the satisfaction of knowing their books are handled by professionals and their data is safe from theft or corruption.