One of the most important things that accounting teams have to do is close the books at the end of each month. For accounting firms in San Francisco, the monthly close must be both accurate and efficient. This is important not only for compliance but also for giving clients timely information. But a lot of businesses have to decide between automating, outsourcing, or doing both.

This article will look at how outsourcing and automation affect the monthly close, their pros and cons, and when it makes sense to use both at the same time for the best results.

Why the Monthly Close Process is Important

The monthly close makes sure that all financial activities, like income, expenses, reconciliations, and accruals, are recorded correctly. When done right, it gives:

• Data on finances that you can trust
• Better compliance
• Reporting faster for making decisions
• Better planning and forecasting for business

But if you don’t have the right tools or systems, closing the books can seem like a lot of work, make mistakes, and take a long time. That’s when outsourcing and automation come into play.

Option 1: Making Your Monthly Close Automatic

Automation means using software to make tasks that are done over and over again, like reconciliations, journal entries, and data validation, easier.

Advantages of Automation

Save time by cutting down on manual data entry and shortening deadlines by days.

• Less Mistakes: Get rid of mistakes that happen when you use spreadsheets and do things by hand.
• Real-Time Insights: Get accurate data faster to make client reports better.
• Scalability: You can handle more transactions without hiring more people.

What automation can’t do

• Costs Up Front: Setting up automation tools can be costly.
• Learning Curve: Staff may need training to use new systems fully.
• Needs for Maintenance: You need to keep track of software updates and integrations on a regular basis.

Automation is best for accounting firms that want to keep an eye on their work while making it more efficient.

Option 2: Hiring someone else to do the monthly close

When you outsource, you give some or all of your monthly close tasks to a third-party accounting service provider.

What are the benefits of outsourcing?

• Expertise on Demand: Get help from highly skilled professionals without having to hire full-time staff.
• Cost-Effective: Cut down on salaries, benefits, and infrastructure.
• Focus on Strategy: Give your internal teams more time to work with clients and give them advice.
• Services that can grow with your business: You can easily change the level of support as your business grows.

Outsourcing has its limits

• Less Control: Companies might not feel like they are in charge of their finances.
• Problems with communication: Different time zones or being busy can make things take longer.
• Risks to Privacy: You need to be very careful with sensitive data.

Companies that don’t have a lot of resources in-house or want to focus more on strategic advisory services should consider outsourcing.

Option 3: A Mix of Approaches

Combining automation and outsourcing is the best solution for many accounting firms in San Francisco.

Why Hybrid Works

• Automate for speed: Use technology to quickly check data and make sure everything is in order.
• Outsourcing for Knowledge: Give difficult or time-consuming tasks like financial analysis or compliance reporting to someone else.
• Cost Balance: Cut costs by automating tasks that are done over and over again and only outsourcing tasks that need special skills when they are needed.
• Flexibility: You can change the amount of support you give based on how many clients you have or how busy it gets during certain times of the year.

This mixed approach lets companies stay efficient, keep quality high, and focus on customer service without putting too much strain on their internal teams.

How to Choose What’s Best for Your Business

Deciding between automation, outsourcing, or both depends on what your company needs. Here’s a list to help you make your choice:

High volumes of transactions may need automation to save time.

• In-House Expertise: If you don’t have enough knowledge, you may need to hire someone else.
• Budget: Think about both the short-term costs and the long-term return on investment (ROI).
• What do your clients expect? Do they want reports that are very personalized or insights in real time?
• Plans for Growth: If you’re growing quickly, a hybrid model might give you the freedom you need.

Example from the real world

A lot of accounting firms in San Francisco are already using hybrid models. For example, companies often use cloud-based platforms to automate reconciliations and hire outside experts to handle tax preparation or compliance reviews. This not only makes things more accurate, but it also lets partners focus on advisory services that give clients more value.

What the Monthly Close Will Look Like in the Future

• AI-Powered Automation: AI can do more than just basic automation; it can also find problems, guess when they will happen, and suggest ways to fix them.
• Cloud-Based Outsourcing: More and more outsourcing companies are using real-time collaboration tools to make communication easier.
• Advisory-Focused Firms: Companies can become trusted advisors instead of just bookkeepers as they automate or outsource routine tasks.

Last Thoughts

The most important thing is to make sure that the monthly close process fits with your company’s goals, whether you choose automation, outsourcing, or a mix of the two. Automation speeds things up and makes them more accurate, while outsourcing brings in experts and flexibility. Together, they can make an accounting function that is ready for the future.

Are you ready to change your monthly close?

Set up a free 15-minute meeting with our most experienced CPA, Samy Basta, and learn how to make your company’s monthly close process easier today.