In-House vs. Outsourced Accounting: What’s Best for Your eCommerce Business?

Table of Contents

•  Overview
•  What Is the Difference Between Internal Accounting and Outsourced Accounting?
•  Outsourcing versus In-House Accounting: What’s the Best Option for Your Business?
•  How Do I Know I Should Outsource Accounting Services
•  Top 3 Companies for Outsourcing Accounting Services for eCommerce
•  Conclusion
•  FAQs

Overview

Coming through an eCommerce company in the dynamic digital age is a thrilling experience, but it has its own challenges, especially financial. While monitoring sales on multiple platforms, managing inventory, payment for foreign services or products, and product returns, maintaining full regard for the company’s finances is usually overlooked.

Having the right eCommerce accounting solutions operating an online business is what keeps it alive and thriving, but how do you manage this vital task? From in-house vs outsourced accounting, every online business owner must respond to this. It is not an easy decision; strategically, it determines the productivity, compliance, and growth of your business. In short in-house vs Outsourced Accounting is a trade-off among account cost, control, expertise, and scalability.
In this blog, we will discuss the pros and cons of both choices so that you can decide what would be the best choice for you.

What Is the Difference Between Internal Accounting and Outsourced Accounting

Before we contrast which of the two is better, let us clearly establish what actually distinguishes internal (in-house) accounting from outsourced accounting:

Internal (In-House) Accounting:

This essentially translates to you employing your own accounting staff to work in your company. It could be anything from a simple bookkeeper or accountant with a small business to perhaps an entire finance department with various functions (e.g., accounts payable, accounts receivable, payroll specialist, financial controller) for an eCommerce provider.

Key Traits:

• Direct Supervision: Direct supervision means you have direct control of your accounting and accounting staff; it can mean you can control your commonplace. Account Payable Services footprint as well.
• Physical Presence: By physical presence we mean that the accounting staff is part of the organization, whether they are remote or on site and an employee, but is tested and is part of your core operation.
  
• Single-Minded Focus: Your accounting staff is focused only on your company’s financial needs.
• Deep Internal Knowledge: Internal staff over time are going to have the deepest internal capacity and knowledge of the particular operations, peculiarities, and history of the company.
  

Accounting Outsourcing:

Accounting outsourcing refers to the process of hiring or contracting with someone outside the organization and/or outside the company, such as an independent professional or firm. The service provider will be an external firm or an independent professional and not an employee of the firm.

Key Features:

• External Expertise: You can employ a team of professional accountants and financial analysts who offer their services to multiple clients, typically specializing in eCommerce accounting solutions.

• Work Remotely: Generally, the provider of the account works remotely from your location, utilizing cloud-based applications, and communication is encrypted.
  

• Scalability: Scaling of services in the upward or downward direction based on the current needs of the business is possible without the inconvenience of hiring and firing.
  

• Professional Specialization: Outsourcing firms in general have professional specialization in fields such as eCommerce, offering you professional accounts payable Services and other finance management services.
  

• Cost Structure: You pay only for services rendered in most instances, which means that you don’t pay a fixed salary and benefits. 

The major difference between In-House vs Outsourced Accounting is that the accounting task is done by whom for the business. Both models do have pros and cons too.

Outsourcing vs. In-house Accounting: What is best for the business?

The ultimate choice of in-house vs. outsourced accounting really depends on your unique eCommerce business size, level of development and growth, capabilities and means, complexity, and intended objective.

When in-house accounting could be the best solution for your eCommerce business:

• You want control and a coordinated system: if one of the ways you like to operate your business is to have an accountant on staff, essentially part of the team, attending your command whenever you have an urgent question or an unexpected meeting, then in-house may be the best choice.. This allows accounting such as accounts payable services to have very close coordination with other departments like operations or sales.
  

• Adequate Financial Resources: If you have a sufficient budget for salaries, benefits, office leasing, software, and training for the in-house accounting staff, cost might not be the biggest obstacle.
  

• Single-Minded Focus: Your internal accountant focuses solely on your company, going deeper into your company’s specific financial idiosyncrasies, that feeling of ownership that comes from being internal.
  

• High-Sensitivity Data Security Issues: Although good outsourced companies have good security, some companies with highly sensitive or proprietary information may choose to have an all internal staff, where the information never leaves the immediate control of the company.
  

Challenges with In-House Accounting for eCommerce:

• Fixed Costs are High: Salaries, benefits, local taxes, software, and office rent are exceptionally expensive, especially for a good accountant.
  

• Hiring and Retention: It is hard and time consuming to source and retain qualified, experienced and trustworthy accounting staff especially if the staff member has eCommerce accounting solutions experience.
  

• Specialized Knowledge: The in-house accountant may lack highly specialized expertise in areas such as global taxation, online store inventory accounting, or payment gateway compliance.
  

• Scalability Problems: It is inefficient and expensive to hire additional employees as your firm grows, while in times of recession, you maintain static payroll costs.
  

• Dependence on a Single Individual: If your one in-house accountant leaves or goes on prolonged leave, you have a severe knowledge gap and business disruption.
  

When Outsourced Accounting Would Work for Your eCommerce Business:

• Desire Cost Savings: Outsourcing turns fixed costs (salaries) into variable costs (service fees), which saves money, and is very important for small and developing businesses.
  

• Ecommerce Expertise: Outsourced businesses are experts in eCommerce accounting solutions and services involving multi-channel sales, payment gateways for reconciliation, costing of inventory, tax issues regarding cross-border sales (GST, VAT), and accounts payable Services.
  

• Core Functions of Your Business: Outsourcing will enable you and your employees to concentrate on product development, customer service, business development, and marketing.
  

• Access to Leading-Edge Technology: Real businesses are using cutting-edge cloud accounting software, workflow and automation tools, accounting processes and controls, to enjoy modern financial management without capital investment.
  

• Enhanced Risk Management and Compliance: Outsourcing firms remain updated with the rapidly changing tax codes and compliance regulations, which helps you to avoid expensive errors, penalties, and stressful audit experiences.
  

Disadvantages of Outsourcing eCommerce Accounting:

• Reduced Direct Control: When you transfer responsibilities to an outside firm, you relinquish some degree of day-to-day control over those operations, and that may feel slightly uncomfortable at times.
  

• Communication Gaps: Communication gaps can sometimes include time zone differences or slow communications, but most advanced tools eliminate this issue.
  

• Fewer Internal Knowledge: An outsourced staff member will not have the same extensive, long-term internal working knowledge as an internal staff member.
  

• Identifying the Right Provider: It is tremendously important to evaluate and select a provider that is properly qualified, trustworthy, and compatible.
  

The In-House vs Outsourced Accounting decision is a strategic weighing of these pros and cons against your company’s near-term requirements.

When Should You Consider Outsourcing Accounting Services to an eCommerce Provider?

Deciding when to use in-house vs. outsourced accounting, or deciding when to use outsourced accounting for the first time, is entirely dependent on you consistently tracking all the relevant metrics associated with your eCommerce business.

• Your Business is Experiencing Growth (or Fluctuations): eCommerce accounting solutions and accounts payable Services, through outsourcing, can provide you with a means of growing without having to always hire. Seasonal fluctuations can be managed well, for example, without worrying about the huge fixed costs.
  

• You’re Spending Too Much Time on Accounting and Financial Administration: If you and your non-accountant staff members are spending too many hours on financial admin, it’s time to question whether you should be outsourcing in order to concentrate on core business development.
  

• You Don’t Possess In-House Specialized eCommerce Accounting Expertise: If your employees are not experienced in multi-channel reconciliation, payment gateway fees, inventory valuation, and tax conformity, outsourcing will cut down on errors of omission.
  

• You Must Minimize Fixed Overhead Expenses: Outsourcing turns fixed high costs into manageable variable expenses, releasing cash flow for marketing or inventory investment.
  

• You Require Better Financial Information to Make Decisions: Specialist outsource firms give you thorough, usable financial reports to make better strategic decisions.

If you’re experiencing any of these signs, outsourcing accounting services for your eCommerce business could be a very effective solution.

The Top 3 Companies for Outsourced Accounting for eCommerce

Now that you’ve beaten the first hurdle and decided to reach out for outsourced accounting, your next step will be determining which partner is the best fit for you. When it comes to eCommerce businesses, here are some examples of companies that will help you with eCommerce accounting solutions and accounts payable Services.

Fiscora Consulting

Fiscora Consulting has a huge image of its niche of outsourcing accounting for eCommerce businesses. They are your run-the-gamut team, from processing sales across multiple channels through reconciliations of payments from different payment gateways, inventory data integration, and customized financial reporting for online-based retailers. Plus, they use intelligent technology to automate your accounts payable Services and financial activities across giant platforms like Amazon, Shopify, and Flipkart.

Invensis

With over 20 years of experience, Invensis offers full-service eCommerce accounting solutions and bookkeeping services. It posts transactions automatically across multiple channels of sales and connects with many eCommerce solutions and payment gateways for simple data exchange. Its solutions grow with organizations from small startups to big retailers, providing them with centralized views of funds and processing foreign currency transactions—keys to global eCommerce.

Meru Accounting

Meru Accounting provides bookkeeping and accounting services globally with an extremely high focus on eCommerce. They have certified bookkeepers and accountants who are certified in the top software, such as QuickBooks and Xero. They take care of daily accounts payable Services and eCommerce accounting solutions, ensuring that tax compliance and financial reporting are done on time, thereby gaining trust as a good outsourcing accounting option for many businesses.

Conclusion

Deciding whether to hire in-house accountants or outsourced accountants is a big step for any eCommerce business when operating in a fast and ever-changing digital world. In-house staff provides direct control as well as internal expertise, but with higher fixed costs and hiring issues. Outsourcing, on the other hand, is associated with cost effectiveness, eCommerce accounting solutions, expert availability, scalability, and improved compliance.

Evaluating your short-term requirements and long-term goals of your company will help you decide on the right accounting approach to keep your eCommerce company in sound financial shape and ready to grow.

FAQs

Q1: Is outsourced accounting good for small eCommerce startups?

A1: Yes. Most startups use outsourcing. Limited budgets make it hard to recruit full-time experienced accountants. Outsourcing skilled eCommerce accounting solutions and accounts payable Services at affordable rates helps startups maintain clean books of accounts right from day one, which is essential for growth and funding.

Q2: How will accounting outsourcing companies protect my extremely sensitive poverty information?

A2: A reputable firm would ensure that the highest standards of cybersecurity are met through the use of encrypted cloud-based technology, multi-factor authentication, secure data transfer, and strict compliance rules to maintain the integrity of your information. 

Q3: Am I going to lose control of finances if I outsource accounting?

A3: No. You maintain control and decision-making power. Your day-to-day work is done by outsourced employees who give you clean reports and dashboards, so you have greater, more precise knowledge of your money than ever.