The Pros And Cons Of Outsourcing eCommerce Accounting

The Pros And Cons Of Outsourcing eCommerce Accounting

When eCommerce businesses are looking to grow and expand their operations, they may consider outsourcing eCommerce accounting functions to access reliable and expert support.

Many eCommerce owners find themselves overwhelmed when it comes time to deal with their business finances. For those who choose to outsource accounting processes, this can be a double-edged sword. While your company’s bookkeeping will need to be part of a larger team responsible for other accounting practices, outsourcing the process means you can focus on key business processes and have access to reliable experts. At the same time, there are specific challenges both companies and employees face when they outsource their bookkeeping and accounting needs.

In the past, eCommerce businesses were usually not concerned with outsourced eCommerce accounting services because they could easily do it themselves–with a bit of help from their accountants or bookkeepers. But as eCommerce companies grow, so does the size of the accounting function itself, and eCommerce businesses may find themselves struggling with their accounting tasks.

Outsourcing eCommerce accounting functions can free up e-businesses to focus on core business processes while having reliable and expert support. In addition, companies will also have the opportunity to work together with experts from various areas that can bring a fresh perspective to eCommerce accounting processes.

However, eCommerce businesses should also keep in mind that there are particular challenges when outsourcing eCommerce accounting functions and these need to be addressed from the beginning of the process.

Outsourcing eCommerce accounting is a popular option for eCommerce companies that want to focus on core business processes, have access to reliable and expert support, and avoid the time-consuming process of managing their own accountants. This post will explore the benefits, and drawbacks eCommerce businesses may face when outsourcing their accounting function.

The Pros and Cons of Outsourcing eCommerce Accounting Functions

eCommerce businesses are facing higher eCommerce competition and have to be more competitive. This is one of the reasons why eCommerce companies enter new markets or expand their product portfolio quickly, which requires them to outsource accounting functions for eCommerce businesses. They do so to free up time and resources that can then be invested into core eCommerce processes. However, there are pros and cons when doing so.

Pro – Focusing on The Core Business

eCommerce companies who decide to outsource eCommerce accounting functions can focus on their core business. This can be a great advantage, especially when eCommerce businesses expand quickly or enter new markets.

To facilitate growth, you might need access to an extra headcount. As more and more niche business service companies offer specialized services such as eCommerce accounting, fractional CFO services, and similar offerings, many businesses are forced to look outside of their internal staff for the additional manpower required to scale operations efficiently. Sometimes though, this comes at a cost.

An organization can focus on its core business activities, which increase sales and results in more customers. For example, hiring a full-time bookkeeper instead of outsourcing this process won’t help you achieve your goals and ties up resources like corporate space and equipment for them.

In addition, hiring full-time accounting staff is not without challenges. You need to consider the costs of specialized tools and training for your new hires along with their insurance packages which might also be pricey. By outsourcing accounting tasks, eCommerce companies can focus on core competencies that contribute to company growth and avoid future overhead costs for hiring an internal team.

Con – Communication Limitations

Outsourcing eCommerce accounting processes can create communication challenges. eCommerce businesses usually look for a reliable expert partner to outsource their accounting function and have access to specialized experts when needed. Aside from the typical challenges of working with a remote team, such as communication issues, there are usually limits to your control over the work, and you may experience other hidden costs.

There will also be additional limitations when it comes to communicating with an external entity. This is why many business owners still feel that having an in-house staff works better for them. eCommerce businesses can be very specific, so it’s better to have a specialized bookkeeper or CFO who understands your business goals and objectives and can act in the best interest of all parties involved for a win-win situation.

Pro – Reliable Support

A business is responsible for providing its customers high-quality service that meets industry standards. Still, a professional accounting company experiences even greater pressure by being held to the highest accounting standards and strict requirements.

You gain peace of mind by choosing an expert eCommerce-focused group that can stay abreast of the substantially changing accounting standards and laws. It’s vital to ensure that you get an accounting expert with knowledge and experience working with the specific industry. eCommerce companies should aim to find eCommerce accounting partners who have experience working with e-tailers and understand your business needs.

Con – Less Control

Keep in mind that your financial reporting offers incredible insights into how to improve business efficiency and achieve growth. However, outsourcing comes with the risk of losing a part of control over your company.

One of the most common worries business owners have about outsourcing accounting is losing access to their financial information. Additionally, some businesses face difficulty communicating with the outsourced company resulting in slow and unreliable performance.

One way to ensure that your company has access to transparent accounting services is through monthly meetings with your outsourced service provider. An eCommerce accountant should provide insightful takeaways from financial reports that you may fail to infer yourself. Companies with an eCommerce focus should schedule regular meetings to discuss how the business is progressing to stay in control.

Pro – Effective Issue Resolution

Another benefit of outsourcing eCommerce accounting is that businesses have access to trained professionals overlooking the finance function at all times. This helps business owners stop worrying about any accounting errors.

While eCommerce companies still need to check the work outsourced accountants do, these professionals will spot any red flags ahead of time and notify you about unusual issues. This can be difficult to track because it involves keeping a close watch on cash flows and expenditures. In addition to providing specific insights, they give you access to an expert in the field and help you make educated decisions.

Con – Hidden Costs

Many eCommerce companies are not aware of additional hidden costs and issues with outsourcing their accounting processes. Outsourced accounting services may charge extra for certain tasks, tools, or software. eCommerce businesses should be aware of the costs for any eCommerce accounting services they want to use.

You need to consider all aspects of your business and the eCommerce industry to make a wise decision about outsourcing eCommerce accounting, especially if you are new or don’t have much experience working with third parties. It is important to consider if eCommerce accounting will get in the way of your business goals.

Finance as a Service vs. Traditional Outsourced Accounting

eCommerce companies may decide to either use a third-party agency as “Finance as a Service” or outsource their accounting function. While using Finance as a Service (FaaS), eCommerce businesses can access experts and specialists they would otherwise not be able to afford.

When compared to simple accounting outsourcing, FaaS offers personalized services that will help minimize or even eliminate the drawbacks mentioned above associated with simple outsourcing. eCommerce companies will also have access to experts they can rely on in case of any questions or needs that may arise.

Together with Consero Global, eCommerce businesses will have access to the following:

  • Finance Professionals – A benefit of using FaaS is that companies have on-demand access to the expertise and experience of the entire team. Companies can also customize services to cover any accounting gaps.
  • Access to the Latest Finance Services and Processes – Paper-based processes can be more of a hindrance than an asset in today’s digital world, but that is not to say all paper-related operations should be dismissed. Outsourcing services are the perfect option for those looking into modernizing their systems and becoming more efficient while also saving costs. By outsourcing accounting work to a professional FaaS provider, businesses can eliminate time-consuming processes, freeing their core staff members to focus on more critical business tasks.
  • Cutting-edge Technology – Consero makes use of state-of-the-art cloud computing, artificial intelligence, and advanced analytics. Its software solution (SIPL) allows businesses to integrate all aspects of their business, eliminate the need for non-integrated digital tools or spreadsheets, and produce easy-to-understand business intelligence.
  • Timely Reporting –  By combining it with integrated systems that track all metrics and key performance indicators, organizations will have immediate insight into the business finances.

Consero is considered a trustworthy leader in the industry with a proven record of taking finance teams to the next level without disrupting other business systems. Feel free to request a demo today!

Consero FaaS: Disrupting the Outdated Traditional F&A Model

  • Cash to GAAP conversion
  • Clean-up work
  • Interim oversight & support
  • Accounting software Implementation

Build it Yourself Solution

  • CFO / Interim CFO
  • Consultants / VARs

Consero FaaS Solution

  • CFO / Interim CFO
  • or Consero Interim CFO
  • Consero Setup/Transformation
Ongoing F&A
  • Monthly financials
  • Daily accounting support
  • Management reporting
  • Integrate add-on acquisitions

Build it Yourself Solution

  • CFO
  • Controllers & Accounting Team
  • Enterprise Accounting Applications

Consero FaaS Solution

  • CFO
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New PE Platform Investment F&A Challenges

Founder Owned Company Accounting:
  • Existing accounting done on a cash/hybrid basis
  • Run on SMB accounting software and other disparate applications
  • Inability to produce auditable financials
  • Lack of know-how to develop projections & KPIs
  • No consistency/structure to customer contracts
  • Underqualified staff
  • Non-scalable manual processes
Carve-Out Accounting:
  • Required to move off parent company accounting applications in a timely fashion
  • Have to build an entire F&A team
  • No documented operational policies and procedures
To Optimized Finance & Accounting:
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