10 Reasons ARI May Not be the Right Outsourced Accounting Firm for You

Below are the top reasons ARI might not be a good fit for your organization.

Accounting Resources, Inc. has been providing outsourced accounting services to clients for 30 years. We often get asked by prospective clients if we feel their organization would be a good fit for our service model. Here is how we respond:

1. Your organization is too small or too large.

• • Too small – Typically we serve companies that have at least $1 million in annual revenue and have been in business for at least three years. Anything smaller than this and the economics of the engagement don’t really make sense. We typically do not take on startups as they often require significant process and can be underfunded.
  • Too large – Our average client earns $1-$6 million in annual revenue. For organizations much larger than this, outsourced accounting usually doesn’t make sense. For example, with a $10-$20 million company, we will likely need to replace a full-time CFO, finance director, or seasoned accountant, in which case, it might be more cost effective for your organization to hire an internal resource.

2. You require project work, temporary services, or tax services.

If you are looking for a short-term fix to manage your accounting function or you have a special project you want to complete, we are probably not the right firm for you. There are many firms that will take on temporary engagements or project work but, at ARI, we look for longer-term engagements where we can truly provide value by serving as the accounting department for the organization. We also do not provide attestation (audit) or tax services but do refer our clients to several tried-and-true partners.

3. You want your accountant to be located in your office.

You may feel that you cannot operate effectively without your accountant being physically in your office. Like most outsourced firms, our staff members typically do not perform accounting services onsite at our client’s locations. Of course, if we have agreed upon it, members of our staff will come to your office for scheduled meetings, trainings or board presentations.

4. Your organization has unique accounting needs or complex financial requirements.

For example, if your company operates in a highly specialized industry requiring unique accounting skills, such as a Department of Defense contractor supplying security services to a foreign government, or you use a highly specialized general ledger platform unique to your industry, outsourced accounting is probably not a good fit for your organization.

5. You have sensitive data that demands extreme confidentiality.

Outsourcing your accounting function requires the sharing of sensitive financial data with a third party. As part of our engagement process, we sign a non-disclosure agreement (NDA) to protect your confidentiality. However, for our relationship to work, there needs to be a certain level of disclosure of information that allows your outsourced accounting team to accurately account for transactions. If confidentiality is a higher-than-normal priority, you might be better served by keeping this function in house.

6. You are extremely technology challenged.

If your organization still operates only via paper transactions, it may be challenging for you to outsource your accounting function. The advent of technology has addressed much of the logistics involved in transmitting information from your organization to your outsourced provider in a timely way; however, to have a successful outsourced arrangement, you should understand what technology and computing systems are needed to transfer data to your outsourced provider, and you must be able to provide timely access to additional information, such as your general ledger, bank accounts, credit card accounts, and payroll services.

7. Members of your internal team are resistant to change.

Change can be difficult, especially for staff members who have been doing the same thing the same way for many years. No one knows your staff better than you, and you need to determine how much resistance you’re going to get if you decide to outsource. There may be opposition to changing your processes and your daily routines and you need to determine if the benefit will outweigh the stress.

8. You have unrealistic communications expectations.

Part of understanding an outsourced relationship is understanding that it’s fractional by nature. That means the individuals on your accounting team serve multiple clients. If you are the type of individual that demands an immediate response to every inquiry, you may not be right for an outsourced relationship. We make every attempt to respond to questions, e-mails, and phone calls within 24 hours, but our responses are often not immediate.

9. You expect your outsourced firm to carry the entire load.

As with any relationship both parties need to do their part to make it work. This is certainly true of outsourced accounting. We do our best to assign roles and responsibilities to each party at the start of the engagement to set clear expectations and ensure everyone understands what their responsibilities are.

ARI does not have long-term contracts. Instead, we operate on a 30-day contract with every client, which means that either party can terminate the relationship with 30 days’ written notice.  Although it doesn’t happen often, there have been situations where we have had to terminate a client because they are not holding up their side of the arrangement.

10. You expect costs to remain flat as your organization grows.

The majority of our client engagements are priced at a flat monthly fee. We work hard to set a price that is fair and transparent. This allows our clients to budget more effectively and to have a clear understanding of what the projected cost of their accounting services will be. Typically, our clients see a savings compared to their previous accounting arrangement.

However, as your organization grows (i.e., adding new companies, starting new programs) this can alter the scope of the relationship. Understanding this, and maintaining open communication is key to a healthy, long-lasting partnership. It’s helpful to understand that, as your organization grows, the cost of accounting services will likely grow along with it.

Still debating whether outsourcing your accounting function is the right solution for you? Check out this video to discover the 10 benefits of outsourcing your accounting function.

Ready to discuss your needs and explore your options? Contact us today.

Summary

Outsourced accounting is not the right fit for every organization, particularly those that are too small, too large, highly specialized, or resistant to change. Understanding your company’s size, expectations, technology readiness, and communication style is essential before entering into an outsourced accounting relationship.

FAQs

How do I know if outsourced accounting is not the right fit for my organization?

Outsourced accounting may not be the right fit if your organization falls outside the size range we typically serve or if your expectations do not align with an outsourced model. We generally work with organizations that have at least $1 million in annual revenue. Businesses that are much smaller may not find the engagement to be cost effective, while significantly larger organizations may benefit more from hiring full-time internal accounting leadership. Outsourced accounting may also not be the best option for organizations seeking short-term, project-based, temporary, audit, or tax services, or for those that require constant, immediate responses throughout the day.

What size companies are best suited for outsourced accounting services?

Our outsourced accounting services are typically best suited for organizations with annual revenue between $1 million and $6 million. Companies smaller than this may find that the economics of an outsourced engagement do not make sense, while much larger organizations often require a full-time CFO, finance director, or senior accountant. In those cases, hiring internally may be more practical than outsourcing the function.

Can a business outsource accounting if it relies heavily on paper-based systems?

Outsourced accounting can be challenging for organizations that rely exclusively on paper-based systems. Successful outsourced engagements require the use of technology to share information efficiently, including access to general ledgers, bank accounts, credit card accounts, and payroll systems. While technology has simplified the logistics of transmitting information, organizations must be able and willing to adopt basic digital tools to support a smooth and timely flow of data.

What expectations should companies have about communication in an outsourced accounting relationship?

We strive to respond to questions, emails, and phone calls within 24 hours. Clear communication expectations and an understanding of how the relationship functions are key to making the partnership successful.

Will outsourced accounting costs increase as a company grows?

Outsourced accounting costs may increase as an organization grows. While many engagements are priced at a flat monthly fee to provide transparency and predictability, changes such as adding new entities, launching new programs, or increasing complexity can expand the scope of services. As a result, the cost of accounting services will typically grow alongside the organization. Maintaining open communication helps ensure the relationship remains fair, balanced, and aligned over time.