All You Need to Know About Outsourced Accounting Services

Not every business owner has the time and energy to manage every aspect of a business. It’s understandable if you are not able to handle all of the responsibilities of running a business. In such cases, outsourced services have become a more common solution for small businesses. 

This article will introduce you to outsourced accounting services, one of the most popular types of outsourced services, and help you decide whether your business needs to use outsourced accounting services or not. 

What are outsourced accounting services?

Outsourced accounting services are a third party that provides a full accounting department experience for small businesses. 

An outsourced accounting service handles day-to-day transactions, accounts payable, accounts receivable, financial statements, taxes, payroll, financial reports, and many other accounting tasks like a regular accounting department. 

Most outsourced accounting services provide a wide selection of packages; you can decide whether you also need a bookkeeper or an auditor. To remain competitive in the market, outsourced accounting service providers must constantly enhance their abilities and certifications. You can rest assured that your books are handled well by finance professionals. 

However, keep in mind that even if you hire an experienced and qualified accountant, you’ll still need to be involved in authorizing invoices, making payments, evaluating timesheets, etc.

The benefits of outsourced accounting services

Cost-saving

Hiring an outsourced accounting service is often cheaper and more cost-effective than hiring in-house staff to handle the finance function. 

By outsourcing, you can save your money on costs that hiring an employee would generate, such as paid leaves, health insurance, retirement, vacation, bonuses, and sick days. You just pay for what you require. 

Furthermore, accounting and bookkeeping services are charged on an hourly basis. It means that you can increase or decrease the number of hours without interruption.

Time-saving 

As your company expands, you’ll realize yourself focusing more on the business’s core value rather than handling administrative tasks. 

As a result, using outsourced accounting services allows you to concentrate your attention, energy, and resources on developing a business strategy. This will then help you increase the business revenue and enhance the relationship with your customers. 

Reduced hiring processes

The hiring process requires many resources. For example, it takes time to develop a recruitment policy, interview, and expenses for onboarding and training new employees. This process usually costs your business a significant amount of time and money and distracts you from other important tasks. 

Outsourced accounting services can help you eliminate hiring and training costs as the service providers already did it for you. All you need to do is choose the most appropriate package for your business, sign the contract, and pay for the plan. 

Accounting scaling made simple

Outsourced accounting service providers can expand their services dramatically in order to compete with their competitors. 

In particular, if your bookkeeping and accounting activities require more than an accountant to handle, you can easily demand more staff from the service agent. 

Automation technologies

Most outsourced accounting services have adopted accounting automation technologies to save time. It also reduces human errors and helps business owners eliminate hazards. 

Moreover, automation technologies will lower the likelihood of internal fraud. You’ll have multiple pairs of eyes on your transaction processing and reports, which provides increased internal controls. Having a dedicated team with expertise in accounting best practices will be far more likely to spot an anomaly than one person who’s probably overburdened and overloaded with work.

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When should you consider using outsourced account services?

Outsourced accounting services are most effective when:

  • A small company doesn’t need a full-time accountant, but it demands someone with higher accounting knowledge and skills than a regular office staff or secretary.
  • A business that can’t afford to hire a full-time accountant with the necessary skills.
  • Temporary services are required, such as extra assistance with end-of-year reports or when a full-time worker is on maternity leave, sick leave, etc.

The bottom line

Choosing outsourced accounting services is not just about handling your accounting activities. It also helps you drive profits, improve cash flow, and grow your business in the long term. You can always discuss with the service provider to design a package that suits your business needs and budget, brings you the peace of mind, efficiency, and actionable financial intelligence you need to succeed. 

About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!

The 5 Most Common Bank Reconciliation Problems for Small Businesses

A bank reconciliation is a process of comparing the balances between a business’s accounting records for cash to the corresponding information on a bank statement. In this process, the transactions recorded in the company’s cash book are compared to the bankbook to identify any discrepancies in the day-to-day transactions. 

However, there could be multiple errors—which are also known as bank reconciliation problems—in this process. This article will help you identify the top five most common bank reconciliation problems to avoid. 

Transaction-in-transit

In-transit checks and deposits can cause a gap for funds in a bank reconciliation process as the cash movement is not immediate. For example, when a cheque, online payment, ACH (Automated Clearing House) transfer, or cash deposit is received, the business has recorded this movement of money, but the funds haven’t arrived at the bank yet. This is particularly problematic in higher-volume accounts where the stream of cash flows into and out of an account is steady and simultaneous.

A business’s financial statement will not be balanced with its bank statement record if the time it takes for funds to pass through a bank spans a recording period (such as a daily closing or after month-end reporting). This time-lapse can be particularly noticeable when the reporting period coincides with a long public holiday when banks are closed. 

In this case, the way to avoid this problem is to make sure entries are booked to reconcile these accounts for the specified period.

Unpresented cheques

Unpresented cheques, also known as outstanding checks, are checks that have been made by a corporation but have not yet been paid by the bank on which they are drawn.

Bank reconciliation problems might arise when cheques are issued but not cashed or deposited in a timely manner. There is an easy way to avoid this problem: Booking an entry to carry this cheque balance over to the next month will reconcile accounting for the current reporting period while also allowing the company to keep track of check obligations.

Uncleared cheques that are never submitted for payment will also cause bank reconciliation problems. Once a standard timeframe in which the cheque should have been deposited (typically 90 days) has passed, the business needs to take extra steps to resolve the matter. In this case, reaching out to the payees to remind them to present the check for payment is an easy first step to resolve the problem. If a check never reaches the payee or a payee cannot be contacted, the original check should be canceled and a new check issued upon request.

Errors

Many bank reconciliation problems result from “typical” errors, such as:

  • Making an entry twice: This error produces a discrepancy equal to the amount of the entry in question.
  • Not accounting for a transaction: This error will also produce a discrepancy equal to the amount of the overlooked entry.
  • Making a mistake when entering a comma: This typo produces a discrepancy which can be easier to notice because the digits add up to 9. For example, if you enter $124.0 instead of $12.40, the discrepancy will be $111.60. (1 plus 1 plus 1 plus 6 is 9.)
  • Putting the numbers in the wrong order: This also results in a discrepancy which  can be easier to notice because the digits add up to 9. For example, if you enter $974 instead of $947, the difference is $27. 
  • Making a transaction by mistake: This is one of the most typical errors resulting from clicking the wrong button or misunderstanding the online bank apps’ features. 

Errors from the bank side also add to the most common bank reconciliation problems. For example, the bank records an incorrect amount, enters an amount that doesn’t belong on a company’s bank statement, or omits an amount from a company’s bank statement. 

In case the error is from the bank side, a journal entry or ledger adjustment is required to write it off. The bank will then correct the error, add a temporary adjustment on the Miscellaneous page until the bank adjustment appears on the following month’s statement. To save yourself from such cases, you should always keep a copy of the bank transaction receipt to double-check and notify the bank if any issues arise. 

Related article: What is a Bank Transaction Receipt and its Benefits for Your Business

Unaccounted fees

Unaccounted fees, like bank fees, overdraft fees, and NSF (non-sufficient funds) check fees, will cause discrepancies in a bank reconciliation if they are not included. Remember to include these fees after any cash movement for more efficient bank reconciliation. 

Ideally, these fees can be minimized naturally by using a smart cash flow management system with regular bank reconciliation procedures. Small businesses can consider selecting a bank that offers lower fees and stronger overdraft protection.

Unauthorized withdrawals

Fraud is a major issue that companies should strive to avoid. Whether they are made by an employee or by a third party who has maliciously breached the account, unauthorized withdrawals can bring a company to its knees.

Internally, a division of responsibilities can aid in the prevention of fraud. Employees who are in charge of reconciling accounts should not also be in charge of recording transactions or disbursing cash. Embezzlement might occur otherwise, and the proof of such actions could be easily disguised. For this reason, many business owners hire a third-party finance professional to perform unbiased bank reconciliations.

Externally, to avoid fraudulent transactions businesses can enable supplemental bank protections to bolster account security. The bank can automatically reject transactions that have not been pre-approved. However, these measures are not standard on most business banking accounts; some institutions offer them as a premium option or for chosen clientele.

The bottom line

Bank reconciliation is a necessary process for companies to undertake, but it can also be excessively tricky and tedious. However, by bearing in mind these kinds of errors and paying close attention to the amount in question, you can easily identify the source of the discrepancy. This will save a lot of time and headaches doing bank reconciliation. 

And don’t forget that there are various business automation tools available to automate this process (or part of it) to make it more efficient and more controllable! The Shoeboxed app is a tailored accounting app for freelancers, accountants, bookkeepers, and small business owners to simplify their accounting and bookkeeping processes. Shoeboxed helps users turn their paper receipts into digital, clearly categorized data

Additionally, Shoeboxed’s OCR (Optical Character Recognition) function and human-verification features ensure that your receipts are clearly scanned and well categorized. You can rest assured that your digital receipts are legibly accepted by both the Internal Revenue Service and the Canada Revenue Service in the event of an audit. Moreover, Shoexboxed proudly supports users with many other business tasks, such as managing expenses, storing business cards, tracking mileage, and so much more! 

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Don’t forget to sign up for the Shoeboxed blog if you’d like to explore more accounting tips and tricks, tax news, engaging success stories, together with the latest Shoeboxed product updates.

10 Common Examples of AI in Everyday Life

While we might think that artificial intelligence (AI) is something futuristic, it already has an enormous impact on our daily lives. Artificial intelligence doesn’t only change the way we work but also the way we live and make decisions. In this article, we’ll introduce the top 10 most common examples of AI in everyday life. 

Virtual assistants

Apple’s Siri, Google Assistant, Amazon’s Alexa, and Microsoft’s Cortana are perhaps the most popular virtual assistants available. These AI-powered assistants help users perform various tasks, from finding and calling a contact, browsing websites, to sending commands to other apps. Artificial intelligence has a significant impact on the way these apps work because they learn from every single user interaction. This allows them to recognize speech patterns better and provide users with results tailored to their preferences. There’s no doubt that virtual assistants will continue to grow and become even more capable of assisting us in our daily lives.

Advertising

Have you ever looked at an online advertisement and realized that you were thinking about buying this product? There is no magic here, and AI isn’t reading your thoughts. Instead, it’s about keeping track of your online activities. The search engines record the products you browse on various shopping sites and provide you with advertisements related to these products.

AI also uses demographic data, such as your age, gender, job, etc., to identify which products are most likely to be of interest to you. Today, more and more businesses are using digital marketing tools to target their preferred customers. 

Robot vacuums

Robot vacuums are one of the most common examples of AI in everyday life. They use AI to scan your living area, pinpoint obstacles and remember the best route to clean your house. The vacuum bot can also identify how much cleaning it needs to do based on the size of the room, and some robot vacuums even come with a mopping function. 

Financial services

The banking and finance industry, which plays a major role in our lives, has been using artificial intelligence to optimize customer satisfaction by simplifying payment processes and providing security features. For example, running to the bank for every transaction has become something of the past. Thanks to intelligent algorithms, we can make deposits, do money transfers, and even open an account from anywhere.

Artificial intelligence also increases security, identity management, and privacy controls. A typical example is the automated emails you receive from banks whenever you make an unusual transaction. AI can detect potential fraud by observing users’ credit card spending patterns. The system can create an alert or a request to validate transactions if there is any unexpected activity that doesn’t fit your user profile.

Chatbots

In the past, interacting with customer service was often time-consuming and stressful. Even today, if a company doesn’t offer 24/7 customer service, it will be difficult for customers to have their concerns addressed outside of office hours. One increasingly popular solution to this problem is AI chatbots. 

AI chatbots are set up with programmed algorithms, enabling them to answer frequently asked questions and take/track orders, which makes interactions between the customer and the company easier than ever. Today, advanced chatbots don’t offer only specific output formats such as yes/no questions. They can answer complex questions that require detailed responses. Additionally, if customers leave a poor rating for the response they receive, the bot will identify the mistake and correct it for next time to maximize customer satisfaction.

Text editors and autocorrect

Have you ever typed a misspelled word, and your phone or computer corrected it automatically? That’s because AI algorithms use machine learning, deep learning, and natural language processing to identify incorrect language usage and suggest corrections in word processors, texting apps, and other digitally written documents. 

Machine learning is taught by linguists and computer scientists, which results in high-quality language data. When you type an incorrect sentence, the editor will catch it and make suggestions to fix it.

Facial detection and recognition

Many of us are probably familiar with using face ID for unlocking phones or taking pictures with virtual filters on our faces. These activities are typical examples of AI in everyday life, in which the algorithms incorporate face detection, which can identify any human face, then use face recognition to recognize a specific face to unlock the phone or make a command (e.g., confirming a transaction). Facial recognition also helps government facilities with surveillance and security.

Maps and navigation

Artificial intelligence has drastically improved traveling. Instead of having to buy and carry paper maps, you can now use Google or Apple Maps on your phone and search for your destination. How does the mobile app know where to go and suggest the optimal route, road barriers, and traffic congestion? 

In the past, there were only satellite-based GPS available. Now, artificial intelligence is being incorporated into these devices to provide users with a much more enhanced experience. The algorithms employ machine learning to remember the edges of the buildings they’ve learned, leading to better visuals on the map and the ability to recognize house and building numbers. 

The application can also understand and identify changes in traffic flow, such as user-reported incidents or road construction, to recommend a route that avoids roadblocks and congestion. 

Rideshare apps

When you use a rideshare app, how do they determine the price of your ride? How do they minimize the wait time once you hail a car? How do these services optimally match you with other passengers to minimize detours? The answer is machine learning, another example of AI in everyday life. Uber’s Head of Machine Learning, Danny Lange, has confirmed Uber’s uses of machine learning for ETAs for rides, estimated meal delivery times on UberEATS, computing optimal pickup locations, as well as for fraud detection.

Entertainment 

If you’ve ever finished a TV show on Netflix, you’ve probably noticed how Netflix immediately suggests other shows you may enjoy watching next. YouTube is another platform that recommends videos or playlists relevant to your likes. This is how AI works: it analyzes thousands of records to suggest movies, TV shows, and videos that you might like based on your preferences and reactions to previous media choices.

The bottom line

These examples of AI in everyday life prove why artificial intelligence is talked about everywhere: it appeared everywhere. AI has greatly affected nearly every part of our daily lives, making us more productive and our lives more convenient. 

The Shoeboxed app is an AI-powered accounting app tailored to freelancers, accountants, and small business owners. Shoeboxed helps users clear their desks and drawers from piles of receipts and turn them into digital, clearly categorized data. Users can scan their receipts, manage expenses, store business cards, and track mileage easily with the Shoeboxed app

From there, you can generate expense reports and send them in emails for approvals. What’s more, Shoeboxed offers an OCR (Optical Character Recognition) function and human-verification feature to ensure that your receipts are scanned, well categorized, human-verified, and legibly accepted by both the Internal Revenue Service and the Canada Revenue Service. Shoeboxed helps you simplify accounting processes and focus more on your business’s core values. 

Don’t forget to sign up for the Shoeboxed blog if you’d like to read more about how Shoeboxed has helped our clients integrate artificial intelligence into their businesses and other engaging success stories, DIY accounting, together with the latest Shoeboxed’s product updates.