FaaS Accounting: Meaning, Difference, Benefits, and More

Many startups across the globe are adopting FaaS accounting to manage working capital, make accurate forecasts, and reduce operating costs. But needless to say that there are some entrepreneurs who have limited know-how about this dynamic delivery model of accounting.

In this blog, Finsmart Accounting – trusted by CPAs for outsourcing to India – will share everything important about FaaS accounting. From meaning to benefits and process to the best FaaS provider, we will cover all the crucial aspects!

Let’s first understand the meaning of FaaS accounting:

What is FaaS Accounting?

A company’s financial transactions must be handled without hiccups and blunders. It should be able to close books on time, generate financial statements, and provide precise investor reporting. Achieving all these goals is easier with FaaS Accounting.

Better known as Finance-as-a-Service, it is a future-focused service delivery model using which accounting firms combine their accounting expertise with advanced technologies such as cloud-based ERPs, artificial intelligence (AI), and automation to be more lithesome and farsighted.

With the help of this model, firms can respond quickly to client’s financial needs and produce valuable foresight to enhance decision-making, especially in challenging junctures.

How is FaaS Different From Traditional Accounting?

Before we start on the benefits of FaaS accounting, we believe it is important for startups and businesses to understand how exactly this finance delivery model is different from traditional accounting.

In standard outsourced accounting, specific functions are outsourced to a team of accounting professionals. These services typically comprise recording transactions, monthly reconciliations, and financial report preparation. More extensive offerings might even include payroll, Accounts Receivable and payable (AR/AP) support, and tax filing.

FaaS accounting is just like traditional accounting but much more robust. Some of you must be thinking, “Okay but what exactly makes FaaS robust?” Let us explain.

FaaS combines manual accounting efforts with modern-day technology which ends up simplifying challenging accounting tasks, generate data insights, and create complex reports. Financial automation and AI also play a crucial role in adding to the robustness of FaaS accounting.

FaaS providers offer organizations the full-scale service of an entire in-house or outsourced finance team at a fraction of the price and with much less effort. FaaS providers consolidate all the accounting streams under one roof and are agile enough to meet the requirements of any unique business.

To Whom FaaS Accounting Model Effectively Serves?

All of us have some needs to sustain life but not all of us have the same ones. The same is true for the FaaS accounting model. These are the type of companies benefitting the most from FaaS:

Startups and SMBs: Startups and small & mid-sized businesses that have straightforward requirements with low transaction volumes but seek the power to scale in a short span of time benefit the most from this model.

Scaled and emerging companies: Organizations having complex accounting needs with higher transaction volumes that require in-depth financial expertise. Corporates that are looking for an alternative to staffing a big in-house finance team also show a keen interest in FaaS.

PE and VC-sponsored companies: Companies looking for accounting experts who can work closely with their board, investors, and leadership team to render critical financial advisory and reporting for corporate and capital transactions.

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What are the Benefits of FaaS Accounting?

Partnering with an outsourced FaaS service provider can bring many benefits to your accounting operations. Here are some of them:

#1 Saves cost

When it comes to hiring in-house accounting staff, all costs must be considered. These include salaries, benefits, taxes, and more. Because labor costs are one of the highest expenses for any startup, a lot of entrepreneurs look for ways to pare them down. Signing up with Finance-as-Service providers will help you bring your accounting expenses down by 30-40%, that too without sacrificing the quality.

#2 Improves scalability

When a startup scales, the size of its departments also grows, especially accounting. In fact, its payables and receivables reach a point it has never come across before. This often leaves you with two options – pay more or hire new employees. One way or the other, they will burn a hole in your pocket.

Now, this isn’t going to be an issue with FaaS accounting. You can instantaneously scale up or scale down the accounting processes as well as resources based on your business needs.

#3 CFO support

In case your company doesn’t have the financial or talent bandwidth to hire a CFO, FaaS-driven accounting services can provide you with one. By having a financial expert who can keep your financial operations in order and draft strategies that guarantee ace financial health, you can easily focus on critical business functions and overall growth of your startup.

#4 Latest technologies

This is literally one of the biggest benefits of going with FaaS accounting in 2023. Firms that use the FaaS model often embrace modern accounting technologies. For startups, this means extreme accuracy, reduction in operating costs, and efficiency boost. This also means that professionals you have outsourced will spend less time on tedious accounts and finance tasks and focus more on finding solutions for high-level issues for your business.

#5 Prioritize growth

As an entrepreneur, you have to perform a lot of activities including analyzing your competition, keeping your business organized, focusing on improving clients’ experience, and providing great service for growing a successful business. Trying to handle financial tasks at the same time will consume a lot of your precious time that you could have spent on core business functions.

The FaaS accounting model can help you eliminate such distractions so that you can set your eyes on finding growth opportunities while keeping away from red flags.

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How Finsmart Accounting can Help?

As a leading FaaS provider, Finsmart Accounting brings an agile team of qualified bookkeepers, accountants, and financial advisors that can support your accounting decisions with discretion, wisdom, and accuracy. With AI-powered technology blended with human expertise, we will ensure timely deliveries, reporting, and streamlined processes.

Our team will work like your office staff, stringing along your reporting rhythm and always available for your startup. With deep domain expertise and experience with ever-changing laws and accounting trends, Finsmart will not only ensure that your accounting and compliance needs are taken care of but also safeguard your business from legal complications in the future.

Everything about FaaS accounting

Above is everything you need to know about FaaS accounting. Finance-as-a-Service is not only revolutionizing the financial industry but also making it easy for startups to monitor performance, evaluate risk in diverse scenarios, face challenges head-on, and measure progress accurately in a rapidly-changing business environment.

Finsmart Accounting can help efficiently manage accounting, bookkeeping, and compliance using modern technologies, giving your business an advantage over competitors. We also support offshore clients with India entry services to help them with business expansion.