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Safeguarding Your Financial Data When Outsourcing The Bookkeeping Process

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In the current times, trusting even the oldest employees can be challenging, considering the rise in financial frauds and scams. However, businesses cannot openly display their distrust, as this will cause chaos and low morale among employees. Bookkeeping is a primary point where a situation like this will likely occur. Bookkeeping directly relates to the firm’s financial transactions and cash flow. Many financial frauds and scams include bookkeeping and accounting employees manipulating the transactions and generating personal gains instead of business. Therefore, businesses need to be careful in placing their sensitive data in the bookkeepers’ hands. 

Therefore, having adequate security in place is necessary to solve this issue. Whether a business outsourced bookkeeping services to an independent third party (offshore or onshore) or hires an in-house bookkeeper, it must prioritize the protection and security of the data and conduct thorough research.

The following tips can help businesses safeguard their financial data while outsourcing bookkeeping:

  • Pay attention to who you hire:

While hiring an outsourcing accounting and bookkeeping firm, do not go with the first recommendation or choice. Although they may be competent to handle your requirements, it is better to take time before finalizing to check for any red flags. You need to conduct thorough research about the company, its reputation, working style, previous client records, and other essential details that give insights into its credibility.

You can consider recommendations from friends and family and check the outsourcing firms’ history on the internet. It will give you an idea about people’s views about their services. If there are more negative reviews than positive, do not make a deal. You must also check the internet to ensure the firm was not part of any scam. 

Giving undivided attention to choosing an outsourcing firm is necessary to safeguard your interests. You must ensure the firm employs adequate security measures to prevent leakage or misuse of data. 

  • Monitor your books randomly:

As the business owner, it is your responsibility to monitor every employee and associated party’s work. Apply this same principle to bookkeeping and supervise the progress and maintenance of books per your standards. However, do not follow a specific pattern of evaluating your books and outsourcing firms’ bookkeeping services. Examining their services every Friday or after 15 days will make the outsourcing firm lethargic. They get some room for creating and clearing the errors and manipulations from the books within the time. 

Therefore, consider giving random surprises to the outsourcing firm to monitor your books. Give them a notice before but not too long to correct any deviations. These random examinations will keep them alert, on their toes, and proactive. You can detect any inconsistency and manage a problem before it becomes too massive to handle. 

  • Keep an eye on the outsourcing firm like your employees:

Just like you monitor your employees and look for red flags and potential danger signs, keep an open eye on your outsourcing bookkeeping services partner. Similarly, notice if they miss deadlines due to weird reasons, cause delays, do not pick up calls, etc. MIf you see these traits often, you need to be highly careful. 

  • Strengthen internal control practices and policies:

Outsourcing bookkeeping services may be secure, but blind trust cannot yield positive results in the long run. Companies must set up strong and secure internal control practices, policies, and procedures. It can include:

  • Two signatures to withdraw money or make payments
  • Multi-factor authentication for approved individuals to access accounting files
  • Advanced encryption software and secure transmission of information

Businesses must not give a signed blank checkbook to the bookkeeper for payments. Also, the bookkeeper must not have permission to draw cheques from home. Owners must always ensure payments made by the firm are authentic and not ghost or fraud transactions. 

  • Make technology your friend:

The latest advancements in technology are benefitting small businesses considerably. Cloud servers and bookkeeping services form the current trends. Companies can set up an online account to receive details about withdrawals and deposits through messages and emails.

  • Employ the best and expert-recommended tricks that suit your business:

An outsourcing bookkeeping services firm will encourage its clients to employ the best practices in every bookkeeping aspect. For example, placing a receipt with reasons for cash withdrawal from the locker, restricted credit card uses to specific expenses like gas stations, etc. Also, monthly reconciliation by printing the transaction list and matching it with internal records will highlight discrepancies. 

  • Employ separate people for bookkeeping services:

Keeping one person to manage bookkeeping, payables, receivables, reconciliation, financial reporting, tax filing, etc., can make you vulnerable to fraud. Giving complete control of finances to one party can empower them and provide enough wiggle room for manipulations and scams. Choose an outsourcing firm that employs different professionals for different activities. It will ensure credibility and enhance trust. 

Apart from security, this practice improves effectiveness and efficiency in bookkeeping servicesIf one person is absent, the other processes will not stop. Businesses must have an independent accounting firm or accountant to do the year-end taxes. It provides an objective and separate set of eyes over the books. Firms can know about any shortcomings they couldn’t notice themselves and provide adequate feedback accordingly. 


Businesses must adopt adequate security and protection measures to minimize theft and fraud risks. Securing financial data while outsourcing bookkeeping services is necessary to prevent fraud, scams, leakage of sensitive information, and misuse. It protects the firms from any adverse effects or losses. Do not be ignorant about choosing and monitoring your outsourcing partner. Your outsource partner is working for you to improve your business process, so keep clear communication and inform them in case of dissatisfaction. Doing so will enable you to take advantage of all the benefits offered by your outsourced partner and grow your business.

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