With the ever-growing requirements of advanced software for businesses, it’s almost becoming a necessity to have an agency by your side.
While transitioning your in-house accounting may seem hectic and time-consuming, the process can actually be seamless without any turbulence for your business – if you do it the right way.
Here’s a detailed guide to help you understand the process of migrating your in-house accounting system to an accounting agency.
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Key Takeaways
- Direct transfer, API integration, and migration tools are three ways to migrate your accounting from in-house to an accounting agency.
- Cloud systems have helped 73% of businesses achieve greater efficiency and cost reduction.
- Assess your primary accounting needs before outsourcing your accounting to an agency.
- Practice compliance and security for a successful transition.
Why should you migrate your accounting to an agency in the first place?
40% of businesses are choosing to outsource their accounting to an agency, a transformative rise that has emerged in the last five years.
And there’s a valid reason for it.
For starters, it’s convenient.
As a small business owner, you’re handling your business from a macro perspective.
This responsibility is often too overwhelming, especially when you have to sit down and look into administrative tasks on top of other core business activities.
It can seem exhausting to spend hours on bookkeeping, filling one spreadsheet after another, and ensuring all transactional records are consistent with bank statements and receipts.
Another aspect that gives outsourced accounting an edge over in-house accounting is its cost.
- You can’t overlook that an in-house accountant costs you more than an agency.
- With an agency, you can get your accounting done at a much lower cost.
- Running a small business means you have limited funds to suffice full-time accounting personnel costs.
In addition, you have to factor in the cost of equipment and software subscriptions, travel allowance, office rent, and other utilities.
In comparison, an agency will only expect its monthly or annual fee.
But here’s the thing – this transition is not simply driven by cost reduction.
Rather, it is a narrative that has witnessed a shift post-pandemic.
Businesses are no longer interested in counting numbers. Instead, they’re keen on understanding what impact those numbers hold.
Accounting is now your strategic arsenal.
The American Institute of Certified Public Accountants (AICPA) discovered that 72% of finance professionals believe strategic accounting and in-depth financial analysis adds more value to a business than they did 5 years ago.
Today, realizing the role of accounting beyond cost management is what distinguishes a business from good to great.
You no longer need an accountant who monitors the numbers.
83% of CFOs claim they now dedicate more time to creating value than cost management.
With an in-house team, you could lose objectivity and become complacent in your approach.
An agency adds the perspective you’re missing.
When an agency enters the frame, it is not only looking at what’s working. It uses its expertise to evaluate what’s not working and how that can change.
And what’s best is that they have the experience and skills to take you in the right direction.
They add the value that your organization currently lacks.
Migrating in-house accounting to an agency – 3 tips for a seamless transition
Here are three ways to ensure a successful transition.
1. Choose a cloud service provider
Choosing the right service provider for your accounting needs is the most important decision you will make.
It will determine how smooth the transition will be and whether the process will deliver the results you seek.
Select an accounting agency that offers cloud accounting solutions.
88% of businesses claim higher operational efficiency and productivity due to cloud systems. And 78% of businesses have confirmed increased cost-savings due to cloud computing.
You must ensure that you choose a service provider that practices robust security measures and offers excellent communication.
Data security should be your utmost priority because you are dealing with financial information here.
Thus, make sure you implement various data encryption and compliance techniques like SOC 2 and ISO 27001.
2. Select the best migration techniques
The method you choose for data migration is the key variable in determining the success of this decision.
There are several options with each having its own set of advantages and disadvantages.
Direct transfer
This approach helps you move your financial data directly from on-premise systems to the cloud.
While this approach is simple and straightforward, it is ideal only for small businesses.
It is a time-consuming process for complex data structures and large-scale businesses. The more time it consumes, the higher the chances of human error.
API integration
This approach is structured and controlled as it uses various APIs to transfer data from on-premise databases to the cloud system.
API integration allows real-time data migration and is ideal for applications requiring immediate and continuous updates.
This approach is ideal for businesses looking to scale their operations, having flexibility as their primary need.
Migration tools
Many cloud service providers have migration tools that simplify the data synchronization process.
The best thing about these tools is that they help you handle different types of data, making the process more efficient.
All you have to do is ensure that these data migration tools are compatible with your accounting system and data format.
Automation in finance is key. Make sure the entire transition is automated, reducing the chances of manual or human error.
Thus, evaluate the size and complexity of your data to ensure a higher success rate.
3. Ensure data security and compliance
Many businesses experience data security threats and data breaches when they fail to implement industry regulations during data migration.
A medium-sized business experienced a cyber attack once due to a lack of control and outdated security measures.
Avoid these incidents by implementing a robust security plan. You can leverage role-based access control to manage user permissions and limit access to sensitive information.
8-Step guide to transitioning in-house accounting to an agency
Here is your step-by-step guide to transitioning from in-house accounting to an accounting agency.
Step 1: Understanding the requirements
The first step should always be the inspection of your business needs. Understanding your basic accounting needs will help you determine which service provider to outsource.
- Do you want help processing payroll?
- Do you wish to outsource your entire accounting process to a reliable service provider?
- Do you want help during tax season?
- Do you simply want to outsource your daily bookkeeping and accounting tasks?
And don’t just limit this understanding to the tasks you wish to outsource.
Look at the bigger picture and understand what your primary motivations are.
For example, you could want higher security measures and enhanced data accuracy.
Thus, identify your accounting needs and then choose the service provider.
Step 2: Choosing the right accounting agency
Now that you’ve determined your basic accounting needs, you can start looking at other things.
You can check online and peer reviews to evaluate the proficiency level of different candidates.
Evaluate their experience and make sure you hire an agency with the same industry experience.
Step 3: Negotiating terms and conditions
If you have decided which accounting agency you want to outsource your accounting needs to, start working on a contract.
This contract should clearly highlight what you expect from them.
It should also include the fees and payment methods.
You may even add any clause that you may deem necessary.
Also, don’t forget to include data security measures that you wish to see being implemented.
Step 4: Develop a transition plan
Once everything is clear, you can start working on the transition plan with them.
For the process to run smoothly, make sure you collaborate with the accounting agency, having defined clear roles and objectives.
The responsibilities should be clear from the get-go.
Also, make sure you have decided on the timeline for achieving the goals.
During the transition, you have to focus on communication and ensure all stakeholders know what their responsibilities are.
The more clear you’re about your expectations, the better it will be for this transition.
Step 5: Transferring data
Here is when things will become more serious.
In this step, you will give access to all your financial data to the service providers.
The data should ideally be shared through a secure medium and an updated system.
The importance of security cannot be emphasized enough during this stage.
So make sure you are following all security measures and have clearly implemented privacy settings.
Step 6: Training your staff
See, this is a transitional period for not just your business but also for your staff.
You have to make an effort to ensure your employees are comfortable with it.
Keep all important key players in the loop and provide them with the latest information.
Offer training and support for better communication with the accounting agency.
This is the most important time for documentation.
Document each and every step and mention every big and minor detail that you think would add value for onboarding or in the future.
Step 7: Embracing the change
Communication will play the most crucial role during this transition.
Make sure you address all changes to all parties that regularly deal with your business accounting.
The new system should have everyone in the loop, so look after your employees.
Ask them if they have any questions.
Provide solutions to their concerns.
Explain everyone’s role and divide responsibilities accordingly.
Step 8: Monitoring performance
After the transition completes, make sure you start monitoring the performance of every key player.
The only way to know the success of this transition is to evaluate the results.
Therefore, conduct regular meetings with the stakeholders to see the progress. Address issues that you may face during the initial phase of this transition.
You have to adopt a hands-on approach and be involved to get optimal results.
The 3 KPIs you need to attain optimal results
Evaluating your performance is necessary to see whether or not the transition was successful.
This is why you must write down and explain the key performance indicators.
It is important to have them known during the plan development stage.
Here are the top three indicators for you.
Cost-effectiveness
The main reason why most businesses outsource their accounting needs is to reduce costs.
This is why you must monitor your performance closely to ensure you get the results you set out for.
Ask yourself the following questions:
- Are you meeting your cost reduction expectations?
- Are the results aligned with your financial objectives?
Communication
The role of communication was highlighted earlier.
Hammering the same thought, it is important to communicate your issues and goals to the accounting agency. Be open in your communication and clearly lay out your concerns.
Get timely and regular updates.
If you feel a sense of urgency, make sure they are responsive.
The better the quality of communication, the better will be the results.
Scalability
Another key reason why businesses outsource their accounting needs to an external agency is scalability.
By outsourcing your accounting, you can scale your accounting services. It will make the growth of your business more efficient and well-planned.
Thus, before you hire, see if they have the tools and skills to accommodate large volumes of data.
Would the service providers manage your scaling needs and evolve with time?
Migrate your accounting to an agency: Closing thoughts
Migrating your in-house accounting needs to an external agency is a decision that will impact every aspect of your business.
This is why choosing the right agency becomes crucial.
You want to outsource your accounting to a service that offers cloud technology and industry experience.
While you can opt for a direct data transfer, you can also choose API integrations and other migration tools for this transition.
It is an 8-step process, so make sure you outsource it to someone reliable.
Head over to our contact page and book an appointment with us to discuss your outsourcing requirements.
