You may not be aware that an alternative to performing your services in-house is to sub-contract some tasks to an expert accounting outsourcing provider, and if you are, you probably want to learn more about both methods so you can make informed decisions about your accounting practice resourcing.
At The Access Group, we've worked with thousands of accounting practices in Australia and New Zealand, creating trusted and proven accounting practice management software options for them since 1988. We supply fast and powerful software for accountants, including practice management software, tax software, general ledger software and data management and analytics.
In this article, we’re going to apply all our knowledge to equip you with the best guidance we can on two different methods of performing accounting services: accounting outsourcing and hiring an accountant.
After reading this, you should know exactly how you can adopt accounting outsourcing or hiring an accountant for your accounting firm.
What is accounting outsourcing?
Accounting outsourcing effectively means transferring all, or a portion of, this control to a third party, ideally one with a proven track record you can trust.
In recent years, the COVID-19 pandemic has created challenges in recruiting, retaining and managing high-quality in-house accounting staff in Australia and New Zealand, meaning that engaging with an outsourced service provider is a more attractive prospect for today’s practices.
Outsourced accounting to global talent solutions can be a huge advantage to rapidly growing accounting practices under pressure to increase their accounting function without spending precious business hours recruiting new staff members.
Accounting and bookkeeping outsourcing is a highly flexible solution, with the opportunity to scale back resources in quiet business periods rather than having paid staff members with nothing to do. An outsourced accounting provider may be able to help elevate the performance of teams and systems, allowing the practice to operate at maximum efficiency.
What is an example of outsourced services in accounting?
Some commonly outsourced accountant services include:
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Bookkeeping services
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Compliance: client accounting and tax
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SMSF
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Audits
Pros
Any accounting practice can benefit from accounting outsourcing that you should consider.
This section outlines the pros of accountant outsourcing.
1. Timesaving
Managing accounting work in-house requires accounting firms to manage a large number of client jobs in their day-to-day operations. Outsourcing part or all of your accounting services will give you more time back to spend on your core service offerings.
Accounting outsourcing services means you can review your practice from the perspective of labour costs and get things up and running quicker when buying an accounting practice. Modern software for accountants, such data management and analytics helps you understand the trends and opportunities and make data-driven decisions around your firm's costs.
2. Cost saving
Outsourcing accounting tasks to a third-party company normally offers more value for money and certainty around cost compared with performing services in-house.
This is especially true for a small business with a pre-agreed schedule of accounting tasks for external providers that are the same every month and can be costed in advance.
Accounting outsourcing reduces costs by removing administrative overheads, staff training, software and hardware.
3. Business growth
Accounting outsourcing leaves accounting practices with the peace of mind that they have the space to focus on new areas that will provide a competitive edge in today's market, such as business advisory services.
Additionally, if a client needs help with something outside of your realm of expertise while you’re trying to grow your service offering, then outsourcing this work to a third-party company with more expertise could be a great solution.
A small business looking to build a network of accounting outsourcing advisors to call upon when a client is facing an issue outside their expertise can tap into a higher level of technical skills and knowledge otherwise not available. Any accounting business going down this path can offer a wider range of services and expedite delivery to their clients.
Cons
Accounting outsourcing can also have its drawbacks, so if you are looking at outsourcing your accounting services, you should be aware of the downsides so that you are making an informed decision.
1. Inability to control your accounting data
Accounting practices handle sensitive and valuable personal data that makes them vulnerable to cybercriminals when transferred outside the practice. With global outsourcing for your accounting firm, this means there is more potential for data breaches that need to be mitigated.
When we take into consideration that cybersecurity and accounting businesses tend to go hand in hand, any accounting outsourcing arrangements that you make with a provider regarding how your sensitive client information will be managed should be in accordance with industry regulations. Third-party systems may not be as sophisticated and secure as those in office premises, such as accounting practice management software, so to protect valuable information, it is important to create a plan for risk management with the third-party accounting outsourcing business.
2. Substandard service provider
Partnering with substandard accounting outsourcing companies can be detrimental to your firm, so do your due diligence before outsourcing to third-party businesses. Obtain references and check the company's qualifications and processes. Choose the preferred accounting outsourcing talent for your practice by comparing providers.
3. Hidden costs
Some accounting outsourcing service providers offer services beyond your requirements, this means you are paying for services you do not need or may not use.
Aside from that, not every outsourced accounting provider offers customised rates and services dependent on your practice size or requirements. Make sure you research and pick an outsourced accounting package to suit your budget and meet your practice requirements. On the other hand, you may get some cost savings by using the full-service offering if the additional services cover your practice requirements.
What do I need to know before I hire an accountant?
Accounting practices in a position to recruit new staff in-house are likely to be searching for talent with a particular skill set, along with a personality that easily aligns with their values.
Remote working for in-house accountants has become much more accepted in our post-pandemic world, with many accounting practices now aware of the benefits it provides with respect to productivity and staff morale, and it has also changed how in-house staff are onboarded into their new jobs.
In-house staff who are set up to work remotely with accounting practice management software can help accounting practices expand quickly and efficiently without the need to acquire more office space.
Pros
Hiring an accountant in-house can have many advantages, so we've listed some of the pros for you to consider.
1. More visibility of accounting data
Data management is a pressing concern for every accounting practice, especially as privacy regulations continue to evolve, and it can be difficult to keep across trends in cybercrime.
Managing work in-house is a good way to mitigate the risk of cybersecurity for accounting firms, as it will limit the need to transfer sensitive data outside of your practice, and you will have full control over your own data protection.
2. More control over common practice issues
Running jobs in-house means that an accounting practice can directly manage staff and resolve any issues in real-time.
It will give full control over data entry and system security, so there is no need to send confidential information back and forth between the accounting practice and an external service provider.
3. Clients have easier access to expert advice
Depending on your requirements, you may be able to recruit an accountant with an area of specialty that is a gap in your current practice offering.
Having access to an accountant in-house will be more immediate for you and your practice clients, can support the growth of your practice and help with future planning.
Cons
There are many challenges in hiring an accountant in-house, so it is important to build a clear picture of potential shortcomings you may experience so that you have all the information at hand.
1. Recruitment challenges for small businesses
The COVID-19 pandemic resulted in an enormous strain on accounting practices to recruit quality accounting staff, as well as finding organic ways to absorb them into a workplace’s culture.
Accounting practices looking to hire an accountant must also consider whether they can offer a competitive salary, work-life balance, room for growth and other perks that will keep their new employee motivated in the months and years ahead.
2. Training staff in-house
Upskilling or training in-house can be a time-consuming and costly process for accounting practices and comes with an expectation that existing practice staff will be high performing enough to wear many hats.
That is not to say that in-house accountants cannot deliver work efficiently on a budget, though the problem is there are many associated costs beyond salary that need to be considered. Hiring costs, salaries, ongoing training, system updates, and provision for emergency cover are all additional costs that can soon dent any practice’s bottom line.
3. Cost
When keeping work in-house, the most obvious cost is the salary of an experienced accountant or tax agent.
However, it’s important that practices take a holistic view of all costs involved beyond salary, such as practice and accounting software, professional training, employee benefits and equipment, as this can often get overlooked during the hiring process.
The future of accounting business recruitment
The future of accounting business recruitment will look to combine hiring an accountant in-house, and outsource bookkeeping services and accounting services.
In the wake of the COVID-19 pandemic, accounting practices in Australia have felt an aftershock, with shortages in skill sets proving to be the biggest ongoing challenge to business growth and increased revenue.
This has caused an acceleration in outsourcing accounting professionals, which has become an attractive prospect for more Australian practices, particularly in peak seasons for your business, such as tax returns at the end of a financial year, end-of-year reporting, monthly and quarterly activity statements and audits.
No matter how you want to work, we have a solution for you.
The Access Group provides smart and scalable solutions to manage your entire business or use an accounting outsourcing provider for part of it.
Talk to a specialist and get a handle on better managing your accounting practice with best-in-class powerful accounting practice management software.