More businesses turn to outsourcing accountancy – What’s behind the surge?

The global spend on accountancy outsourcing by businesses has been up by 40% in the past five years according to 2024 figures from AdvanceTrack, which notes this surge in popularity marks a pivotal moment in the accounting industry.

We spoke to professionals from six Rochester area firms to see why they believe more and more businesses choose to go this route and what the benefits of outsourcing accounting services are.

EFPR Group

Hope DellaStua, M.S. PAFM/ partner at EFPR Group has worked in the accounting industry for over twenty years, during which time she has seen a significant increase in the number of businesses outsourcing their accounting services — a strategic move that she says can drive a business’s growth and improve overall financial health.

“This trend is driven by the desire for cost efficiency, access to specialized expertise and the need for advanced technological solutions,” DellaStua said. “As businesses recognize the benefits of outsourcing, such as improved accuracy and scalability, the shift towards leveraging external accounting firms continues to grow.”

DellaStua explains that outsourcing accounting services offers businesses significant cost savings by reducing overhead and providing access to specialized expertise and advanced technologies, which allows business owners to focus on core operations while ensuring regulatory compliance and accurate financial reporting.

“Handling accounting in-house poses risks such as errors and inaccuracies due to limited expertise and outdated knowledge,” said DellaStua, who notes in-house teams may also struggle with scalability. “It can also lead to increased costs from continuous training and overhead expenses. Additionally, businesses face security vulnerabilities and operational disruptions from turnover or absences, which can hinder financial management and overall performance.”

Among the things to look for when choosing a firm to outsource accounting services with, she recommends businesses pay close attention to the firm’s experience, security measures to protect sensitive financial data, proven expertise, track record, the range of services they offer, clear communication, transparent pricing, financial stability and their familiarity with the latest accounting software and technologies.

“Outsourcing accounting services not only offers businesses efficiency and cost savings but also provides access to a broader knowledge base and advanced financial technologies,” DellaStua said. “By partnering with a reputable accounting firm, businesses can ensure compliance, reduce risks, and focus more on their core activities.”

The Bonadio Group

Gregg Genovese, CPA, partner and leader of the outsource accounting and finance team at The Bonadio Group, cites the biggest benefits of outsourcing accounting services as stability in staffing, access to expert advice and different levels of expertise on a regular basis, access to real-time data, and, often, less of a cost burden than hiring a full-time employee(s).

“We like to say with outsourcing that you’re hiring a solution, not a person,” he said.

Genovese has worked in the accounting field for over thirty years and has seen outsourcing grow along with other professional services, like payroll and human resources.

“I expect the trend in outsourcing accounting will continue to grow in the next couple of years,” said Genovese, who points to the labor market being more expensive and an improvement in technology tools and acceptance, such as video conferencing, as other influencing factors behind the growth.

When it comes to choosing an outsourcing partner, Genovese recommends that businesses look for firms or operations that invest heavily in technology and its applications in accounting. Understanding costs and billing and choosing a partner with a compatible communication style are also important topics to consider.

At The Bonadio Group, Genovese explains his team establishes cadence communication up front so clients know exactly what to expect with the frequency, timing and channels used for communication.

DeJoy & Co.

Stephanie Roth, manager of outsourced accounting services at DeJoy & Co., has worked in the accounting industry for over 20 years and has seen the demand for outsourced accounting services grow, particularly over the last several years.

“The pandemic spread people out all over … and companies realized that not everyone needed to be on-site to be impactful and successful,” Roth said. “With this newfound realization came the opportunity for companies to go out, seek the most qualified professionals for the jobs, and not be worried about being in the same geographic location, including accounting professionals.”

She believes that premise, along with the cost savings of not hiring the employee directly, will continue to be a strong trend in the industry.

Another benefit Roth points to for a business when it comes to outsourcing accounting services is that the scope of the services can grow with the business, alleviating the time, cost, and energy of hiring additional employees. Additionally, having an outsourced accounting team can provide another level of oversight and reduce the risk of fraud within an organization.

“These seasoned finance professionals are an extension of your team, providing the benefit of having a qualified group to focus on the daily, monthly, quarterly and/or annual accounting, reporting and compliance roles that are critical to the success of an organization,” said Roth, who notes that outsourcing accounting services should be customized to the unique needs of each business.

At DeJoy & Co. services are tailored and range from CFO/controller services to general bookkeeping to accounting software setups, as well as advisory services and consultation for small to mid-sized organizations, startups and high-net-worth individuals.

“We can prepare and assist with more complex reporting and analysis such as long-range financial models and projections to help take them through the journey of their business,” Roth said.

MMB + CO

Sean M. Rivers, CPA, senior manager at MMB + CO, shared a firsthand example of one of the many reasons businesses and organizations turn to outsourced accounting.

“I’m on the board of a local not-for-profit and our CFO of about 20 years left,” Rivers said. “We tried to fill the position externally and we just couldn’t find the right candidate. So, we actually turned to outsourced accounting and we’ve been very pleased with the results.”

The nonprofit realized it no longer needed a full-time CFO and could save money via outsourcing. Cost savings can be a benefit of outsourcing, as well as the breadth of knowledge that you get when you outsource, Rivers said.

“If you have your own internal CFO or controller, you are kind of limited to their skill set,” said Rivers, who notes that can be problematic if a complex or unfamiliar issue arises. “But when you outsource, we have over 200 people working here, most of whom are CPAs.”

He explains that even if one of the firm’s outsourcing professionals hasn’t seen such an issue directly, odds are someone else in this office has, and as a team, it can often be addressed without additional cost.

“It’s like having an army of CPAs versus maybe just one,” he said.

Rivers believes the number one action businesses should take when looking for an outsourcing partner is to be transparent about their needs and make sure they’re putting it all out there – the good, the bad and the ugly – so that they receive the specific services they need.

“The other thing I would say is they should treat it the same way they treat a job interview for a candidate,” Rivers said. “Even though they’re not on your payroll, you are hiring someone who is essentially acting as an employee of yours. So, you want to make sure that you know exactly who’s going to be working on your account day to day.”

Rivers also says an understanding of the pricing structure is essential, as is being on the same page about communication. His clients can expect frequent communication whether they are local or hours away.

“I try to make sure that I’m speaking to them several times a week and that they understand that while I’m not on their payroll, they can think of me just like any other employee,” Rivers said. “If anything comes to mind that they have a question about they can reach out to me. I’m going to get back to them quickly and I’m going to get back to them with a correct answer.”

Freed Maxick CPAs, P.C.

Alexis S. Becker, CPA, director of accounting and advisory services at Freed Maxick CPAs, P.C., says that outsourcing accounting to a CPA firm can offer numerous advantages.

“First of all, firms employ professionals with specialized knowledge, so our expertise helps ensure that financials are accurate and comply with all relevant laws and standards,” Becker said. “We also bring depth of industry-specific expertise, which allows us to serve a more proactive role in the relationship. Additionally, we can help mitigate risks associated with financial errors, fraud, and non-compliance.”

Errors created during manual entry of repetitive tasks (i.e. bill paying, payroll) are one of the most common risks a business takes on when doing the accounting themselves, said Becker, who notes manual tasks are incredibly time-consuming and labor-intensive and they provide a larger margin for error and more opportunity for fraud.

“Additionally, not understanding or applying certain accounting and tax rules and laws can negatively impact the enterprise,” she said. “For example, there may be tax credits that a business can take and knowing how to apply those can ensure that the business is reaping benefits that are advantageous to its bottom line.”

Becker is in her third decade in the accounting profession and has seen the advent of technology and the use of data play a critical part in shifting accounting processes toward better efficiency and reliability.

“In our work with small to mid-size businesses, we regularly see organizations with antiquated or inaccurate technology in place, people who aren’t trained to use it appropriately, tools that aren’t of any benefit, and resources that provide no support to leadership,” she said. “Outsourcing provides more certainty for business leaders to be better organized, prepared, and informed to make stronger decisions.”

With technology and data, Becker and her team can create custom dashboards for clients that give them a quick and easy way to view their company’s performance in real time.

“These dashboards facilitate cross-departmental (finance, marketing, sales, etc.) metrics to be pulled into a high-level, big-picture snapshot of the company’s current key performance indicators, or KPIs, at a point in time,” she said. “The way we use technology and data are game changers for clients.”

AP Professionals of Rochester

Laurie Enright, CPA, SPHR, is the placement director for AP Professionals of Rochester, which specializes in temporary and permanent placement of accounting, finance, human resources, and administrative personnel.

“Where we come in and can add value is our knowledge of the accounting world and accounting function,” Enright said. “Helping employers understand what their true needs are versus what they envision their needs are.”

Enright says she is seeing a high need for outsourced accounting professionals for interim roles and staff augmentation, especially during the current nationwide accountant shortage. Data from the U.S. Bureau of Labor Statistics shows there are 340,000 fewer accountants than there were five years ago.

She explains that AP Professionals can help a business bridge the gap they may face when looking for a new controller, CFO or other accounting professional. They also offer experienced consultants to help guide businesses through specific projects like developing a policies and procedures manual or cleaning up their enterprise resource planning (ERP) system.

“We have those consultants, those experts, those people that have had a nice career and have seen a lot of things and are open to consulting opportunities at this point,” Enright said. “It’s an opportunity for them to take a critical look at the accounting operations of a business and say, okay, these are things that we can fix.”

Caurie Putnam is a Rochester-area freelance writer.