Accounting isn’t always fun and games. This blog, provided by our friends at blur Group, takes a look at how you can increase your business potential through outsourcing.
There are are number of chores that can be quite tedious for small businesses, like sourcing new furniture for new hires or taking care of your year-end accounts. Some of these can be taken on by yourself, saving you money, but whereas no-one will mind (hopefully) if their desks are wrong, a slip up in your accounting can have the authorities breathing down your neck.
For most people accounting falls in the category of important but unexciting. From keeping track of your expenses and receivables to maintaining proper entries in your financial records, there are many variables that can go wrong. Of course, an in house team would be able to deal with this competently. But can you bear the expense of having a dedicated function in your office? Plus, depending on the level of your accounting needs, it may also be unnecessary.
Luckily, there is another way – outsourcing. This option brings the benefits of a dedicated team, without the hassle of having them on your staff.
But how do you know if outsourcing is right for you? We’ve put together a short guide to help you make the right decision.
Objectively Track Your Business Records
Your records are the key to this decision.
Depending on how long you’ve been running as a business, you should have a pretty large stack of accounting paperwork piling up by now. The first question to ask is: does this need the attentions of an official?
To answer this, you need to look at:
- The amount of time that you spend on accounting requirements a week. Use this to establish a cost basis for outsourcing your accounting. How much do you spend a week, and what else could you be doing with that time?
- Your accounting experience. If accounting isn’t your strong point you could be missing areas where you could save money.
- Your predicted growth: just because you can handle it now doesn’t mean that you’ll be able to do so a year down the line.
- Risk analysis. What are the dangers that you run the risk of if you continue with your current accounting practices? Though the cost of bringing an accountant in may not make sense compared with the amount of time you spend on it, their expertise may mean you avoid falling foul of unexpected tax bills.
There are other more intangible benefits from outsourcing your accounting, such as being able to rest easy knowing that your accounts are in the hands of dedicated professionals. At the end of the day though, it’s what feels right for you.
The Practicalities of Outsourcing your Accounting
If you’ve run through the list above and decided that outsourcing your accounting makes the most sense for you then the next decision to make is how you’re going to outsource it. You’ll need to look at what you’re looking to achieve from outsourcing, whether it’s saving time or bringing in expertise, and how best to achieve that.
The basic question, though, is do you want to outsource everything or only part of the accounting aspects?
It might make sense for you to keep expenses in-house, along with billing, so that you can monitor the financial health of the company. But if you’d rather someone just came in and took it all off your hands, leaving you free to run your business, then simply state that in your brief when you’re looking for suitable agencies.
The Financial Benefits of Outsourcing
Outsourcing means that you only have to pay for the work that your accountant does. If you’ve only got work for one day a week then that’s all you need to pay for. If you have someone in-house, you’ll have to pay them salary, holiday time, benefits, sick time, so on, whereas if you’re using an agency then all of this is their problem.
Outsourcing also gives you more flexibility for managing cashflow. If you’re outsourcing on a project basis, you can evaluate comparable firms and ensure that you get the best service at the best cost. If you bring someone in-house, then you don’t have that fluidity to move to a different provider if your needs change.
Technological advances mean that it’s possible to outsource abroad to reduce costs. Just make sure that the agency you choose has the expertise you need. If you are going to consider looking abroad then aim for countries like Hungary, which as a good level of education and infrastructure (the last thing you need when you’re trying to secure a big deal is for your accounting agency to have a power cut).
This blog was written by Dorothy Mead, Chief Acquisitions Officer at blur Group.
blur Group is a disruptive technology company that is changing the way businesses buy and sell services with its s-commerce platform.