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Thomas Datwyler has owned and managed operations at 9Seven Consulting in Hudson, Wisconsin, since 2013. He has extensive accounting experience, in addition to his roles as a compliance officer and treasurer. Over many years of performing bookkeeping, account reconciliations, budgeting, and related tax activities, Thomas Datwyler has developed a comprehensive understanding of accounting best practices.

Why Outsourcing Payroll Matters

Outsourcing payroll is one of the simplest and most effective ways to improve and streamline accounting processes, particularly for small businesses and companies anticipating growth. Data from The Business Research Company suggests that the global accounting services market will grow from approximately $652 billion in 2023 to over $804 billion by 2028, underscoring the universal reliance on external accounting support. Highly regulated payroll processes demand considerable accuracy, with the smallest errors potentially leading to major losses and regulatory issues. Startups and new businesses often need to start small, but as businesses grow, third-party accounting partners can help meet these demands at scale while lowering the company’s risk and resource allocation.

Using Software to Reduce Errors and Scale

On a related note, organizational leaders should consider the advantages of enhancing operations by using accounting software. Sage Intacct provides small businesses with a range of scalability options, with a focus on businesses employing between two and 2,000 workers. Other popular software providers include QuickBooks Online and QuickBooks Desktop. Automated accounting software can mitigate the risk of errors common to manual reporting processes. Research indicates that software can reduce manual data entry errors by up to 90 percent. Businesses can further optimize accuracy and reduce risk by integrating accounting systems with accounts payable software.

Cash Flow and Internal Controls Still Come First

Regardless of what software and technologies companies invest in, they should also support knowledgeable accounting professionals who provide invaluable services, such as effective cash flow management. Skilled accountants should provide businesses with both short- and long-term cash flow forecasts informed by accounts receivable statements, accounts payable balances, vendor payments, and other key drivers. Business leaders who maintain a clear and accurate understanding of their cash flow enjoy many benefits, including early payment discounts and increased financial flexibility.

Strong internal control is another important aspect of accounting best practices. A transparent and consistent segregation of duties, for example, helps individual accounting professionals track cash on hand, while other accountants prioritize recording transactions in the account system. In smaller organizations with limited resources and personnel, senior leaders might assume responsibility for approving all invoices and payments. However, ideally, experienced accountants can develop and execute internal control procedures that solidify financial oversight and optimize fraud prevention. Most successful businesses model their internal controls after the Treadway Commission’s Committee of Sponsoring Organizations, which most recently updated its integrated internal control framework in 2013.

The Growing Role of CPA Firms and AI

Companies large enough to outsource payroll processes should consider the advantages of hiring a certified public accounting (CPA) firm compliant with GAAP accounting standards. CPA firms support a range of beneficial processes, including tax return reviews, income tax preparation, general tax strategy, and financial statement audits.

Finally, business leaders with their eyes on the future should discuss the potential of artificial intelligence (AI) with their accounting staff. AI can improve accuracy and support decision-making across the board, while also helping accountants identify risks and allocate resources where they are most needed. Common uses of AI in accounting range from invoice classification oversight to automated invoice processing, in addition to AI-enabled cash flow forecasting.