Outsourced vs. In-House Accounting: What's Best for Property Management?

Property management is a fast-moving, complex field. It requires workers in every role to move quickly and accurately with few breaks or allowances for error.

One of the most strenuous (and expensive) positions in property management is in the accounting department. Due to the inherent constraints of hiring in-house staff, more property managers are outsourcing these roles.

What Is the Difference Between In-House and Outsourced Accounting?

Certified public accountants (CPAs) are vital to the success of a company. From paying employees and vendors on time (and correctly) to adhering to tax laws and avoiding running afoul with the IRS, accountants keep business afloat.

Hiring in-house accounts is one possible solution. An in-house team has many positives, including being able to talk to your team in person by stopping by their cubicle. Another plus is an in-house employee’s ability to see and experience how your business operates first-hand. While these are valid reasons to keep a team on-site, moving away from this model — physically and literally — is far more popular for several reasons.

Business process outsourcing (BPO) allows companies to take advantage of talented workers worldwide, improving productivity, profit, transparency, and more. Outsourcing is a key tactic of financial powerhouses. Companies with international name recognition like Walmart and Boeing outsourced accounting and HR services due to the unique advantages of this field.

Who is your business role model? The chances are they rely on outsourcing for some or all of their business processing tasks.

Here are a few reasons outsourcing might be the secret ingredient you’ve been searching for:

Four Reasons To Outsource Accounting in Property Management

1. Access to Specialized Experts

As of 2024, the number of accountants is dropping. In the United States, there is a shortage of 340,000 accounts, causing widespread alarm across numerous industries. Outsourcing allows US-based industries to find incredible talent offshore, oftentimes in countries heavily populated with English speakers like the Philippines.

Outsourced offshore tax and bookkeeping professionals are educated and trained in tax regulations and accounting standards — and the best practices for both. When working with a third-party employer of record, talent pools widen significantly. A trusted BPO staffing company can set your firm up with skilled workers in specializations like bookkeeping, payroll, tax preparation, financial analysis, and more.

2. Productivity

Outsourcing allows budgets to go further. When budgets go further, organizations can afford to take on more team members so that more work gets done in the same amount of time.

One facet of outsourced accounting includes the ability to take advantage of the world’s time zones. For instance, the Philippines is 15 hours ahead of Pacific Standard Time (PST) and 12 hours ahead of Eastern Standard Time (EST).

This time zone can work to your firm’s advantage. For example, managers could send over accounting requests to their Southeast Asia staffing agency before logging off for the day. Then, when they return to work the next morning, the task can be completed and sitting in their inbox. This gets even more successful when the virtual accounting company is staffed 24/7.

A boost in productivity is frequently tied to a group’s EBITDA growth margin. According to STAFFVIRTUAL, clients utilizing their professional accounting support teams have a 24.6% EBITA growth rate and save $ 912,000 annually.

3. Cost-Efficiency

Accounts generally attend school for four or more years, depending on the degree earned. That represents a significant time and financial commitment on their part, especially with the rising cost of higher education in the United States. It’s understandable that accounts would want their wages to reflect this.

The United States Bureau of Labor Statistics (BLS) reports that bookkeeping, auditing, and accounting clerks earn a median of $45,860 per year or $22.05 an hour. The highest earners in the field earned $65,540 a year.

Besides the salary at face value, employers are also typically on the hook for health insurance, paid time off (vacation and sick leave), and retirement plans (like 401ks or Simple IRAs). The BLS estimates that benefits can add up to 31% beyond an initial salary. Additional factors include the costs associated with interviewing, hiring, onboarding, and training.

Accounting software is a major expense as well; this software is intricate, complicated, and powerful. Building this software is pricey, and you can expect the same for the price tag. BPO accounting operations already have this software and the technology to run it (not to mention office furniture and equipment).

This means you don’t have to worry about comparing different payroll software types or finding someone who can run a specific program. Your BPO team already has all of those things.

4. Reduced Risk

The property management world sees an unusually high number of invoices, bills, quotes, and more. Between collecting rent, paying vendors, or reimbursing maintenance workers, it’s far too easy for profit to get lost along the way.

Accountants handle sensitive data and critical resources. With access to funds, banking information, signatures, and personal data, trust is almost more valuable than gold. One threat to an organization’s bottom line is embezzlement. One way to help prevent this inside job is to take the role outside the company’s main structure.

The ability for consistent monitoring and oversight makes in-house accounting an attractive solution. According to Entrepreneur, most embezzlement cases occur at small companies, those with fewer than 150 employees, in particular. Devastatingly, 30% of these cases amounted to losses of more than $500,000, says Entrepreneur.

Small businesses are particularly at risk for dishonest financial practices because of the lack of oversight. Small teams tend to be stretched thin, making it a struggle to monitor the minute details in every action. To better optimize small business accounting, consider outsourcing.

Outsourced staffing agencies are able to exercise incredible oversight and employee monitoring. The best BPO companies help ensure transparent transactions with world-class accounting software and carefully created operating procedures.

Additionally, offshore staffing solutions can constantly update their procedures with tax and finance law changes thanks to their extensive number (of extensively trained) workers. (This is another way outsourcing may save time and money.)

Lastly, many virtual staffing companies also have legal departments, making it convenient for property management companies to better protect themselves without damaging their bottom lines.

Outsourcing Accounting for Property Management: Final Thoughts

It’s difficult or perhaps near impossible to run a successful business without accountants. Accounting and bookkeeping are not things to be trifled with; mistakes could be costly and even bring an organization to its knees.

Outsourcing property management accounting helps reduce overhead, improve productivity, decrease risk, and allow you to hire as many highly skilled workers as you need.