As your business grows, one of the most important areas will be your accounting and finance team.
Although hiring an in-house accountant is a common choice, it may not be the best option for your company. This is especially true when you consider that technology now allows many tasks to be done remotely, at any time and any place.
Here are three reasons to consider outsourcing your accounting work rather than keeping the job in-house:
Outsourcing May Actually Cost Less
Let’s look at a scenario where a company is considering, via a recruitment agency, hiring a young accounting graduate, with 2-3 years of experience, for $50,000 per year base salary.
But what is the real cost of that employee? The table below discusses the many additional costs associated with an in-house employee.
Base Salary: $50,000
Superannuation (9.5%): $4750
Recruitment Fee (16%): $8000
Annual Leave (4wks): $3846
Sick Leave (10days): $1370
Office Space ($500/mth): $6000
Misc (Food/Supplies etc) $1500
As you can see, hiring an in-house employee for your company can cost you up to $30,000 more per year above the base salary.
Plus there are all the workplace health & safety and HR aspects of managing employees.
By outsourcing, all you pay for is the work—nothing else. And ask yourself – would outsourcing the work cost you as much as $80,000? It is at least worth considering outsourcing as an alternative.
Outsourcing Provides Continuity
If accounting is not your core business, what happens when your ideal young accountant decides to leave? Do you stop working on the core activities of your business to recruit and then train a new young accountant?
It may take weeks (or even months) to hire someone else and you will have to train them. What sort of effect is this going to have on your operations? How long is it going to take your new employee to be as competent in their role and familiar with your clients as their predecessor?
By outsourcing, the burden moves from you to the contractor. The majority of outsourcing companies will have more than one employee working on your job. So, if one of their employees quits, they have others who are equally as comfortable with your needs to fill in and take their place. Their work papers and other systems will ensure the knowledge of your company’s needs will not disappear with a departing employee.
Outsourcing Keeps You Competitive
Let’s say you are lucky enough to keep an employee with you for 10-plus years. Sounds great, right? Maybe not.
Although you have avoided employee turnover, you’ve potentially created an entirely different problem.
The accounting employee who has stayed in the same job for more than decade, will almost certainly have a very set way of doing things. And because accounting is not your core business, they receive no exposure to the way technology and processes have evolved – and thus your business might be missing out on the positive effect these changes could have to your bottom line. By not keeping up with a forever-evolving business world, you may sacrifice your company’s ability to remain competitive.
Any worthwhile specialist contractor will see a wide array of businesses and stay up-to-date in their field through continuing education and conferences.
Are you ready to outsource?
While a good accounting and finance team is essential to the long term health of any successful business, technology has provided many options for how these services can be implemented into your business.
If you are considering, or have always chosen, the traditional route of employing these skills directly, at least stop to consider the real costs and ongoing effectiveness of the direct employment versus outsourcing options.
There could be savings and other efficiencies just waiting for your bottom line.