How to Evaluate an Accounting Services Provider

Managing a business’s financial accounting is a core function that helps ensure compliance and maintain a logged record of its business operations. Savvy entrepreneurs also seek strategic accounting services like financial reports, models and forecasts to gain insights and make data-driven decisions that drive growth.

When looking for an accounting services provider services provider, it’s important to determine exactly what your needs are and compare them with a provider’s offerings. A few key areas to focus on are ensuring your provider can perform all of the essential back office tasks, establishing whether they have accounting expertise that matches your business and gauging their level of flexibility to meet your needs.

The most basic accounting service is bookkeeping, which involves recording all the financial transactions that take place at a business. This information is logged in the general ledger and can be used to run reports, monitor spending and track income. Typically, the most common bookkeeping tasks include entering customer and vendor invoices, reconciling banking statements and credit card accounts, and recording payments.

Financial accounting is a step up from regular bookkeeping in that it takes a more in-depth look at your financials and can be used to analyze trends, create budgets, manage cash flow and prepare for future tax filings. A CPA can provide a variety of financial accounting services, including performing audits and tax returns, preparing and analyzing quarterly anticipated taxes, and providing expert guidance.

If your business is owed money by customers, an accounts payable (A/P) service can help you keep track of who owes what, and manage invoices more efficiently. This is a particularly useful service for businesses that pay a lot of attention to their cash flow and seek ways to improve inflows and outflows.

Some outsourced accounting providers offer a full suite of financial services, including both tax and management reporting and consulting. This type of fully-integrated approach is ideal for a growing company that is seeking a partner to help it leverage its accounting data into actionable strategies for growth.

When evaluating a potential accounting services provider, make sure to ask about their communication protocols. Especially for high-level or sensitive accounting work, effective communication is critical. Issues like time zone differences, lack of clear communication channels and misunderstandings can lead to costly mistakes. Also, be wary of hidden costs and be sure to negotiate a fixed price rather than hourly billing when setting up an account. This will minimize the risk of scope creep, in which one task snowballs into several and can quickly increase your overall bill.