![Knowing the When, What and Why of outsourcing](/images/default-source/blog/knowing-the-when-what-and-why-of-outsourcing.jpg?sfvrsn=2bec67_1)
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Henry Ford didn’t invent the first automobile. He accelerated his auto empire by implementing segmented procedures on the assembly line.
Ford put the pedal to the metal and sped up auto manufacturing. Instead of a single employee or small team working on one vehicle from start to finish, each employee specialized in adding one piece. The result? Model Ts built at scale with reduced production time and costs.
As with auto manufacturing, sometimes it doesn’t make sense for a CPA firm to handle all accounting aspects for their clients from start to finish. Rather, delegating to professionals outside the firm might be best to improve efficiency and client value.
How can an accounting firm recognize that it’s time to outsource? What tasks are easiest to hire out? What are the benefits of outsourcing?
Let’s get into all those questions.
Knowing when to outsource
Handing over control can be easier said than done. Recognizing where your firm could use a boost is the first place to start. The following watchlist can help you make your decision.
• Economic downturn – If demand for your services is low or overhead costs are high, outsourcing some accounting tasks might be a good idea. Doing so will allow you to scale your services up or down as needed, depending on business fluctuations.
• Sagging quality – When your workforce is treading water in a sea of responsibilities, offloading their obligations might be the best way to improve their work quality.
• Stressed employees – A stressful workload compromises your talent. Unhappy employees make it difficult to keep a steady, productive team. Disgruntled employees may create a revolving door of talent, or they may stick around and bring down other crew members. Continuity and quality will suffer and diminish your bottom line.
• Tech challenges– Technology continues to improve accounting functions. It isn’t always possible to keep up with the changes, especially for small firms with limited resources. Outsourcing to a firm specializing in specific accounting functions can give you access to upgraded technology and expertise.
Deciding what to outsource
Every accounting firm has unique obstacles. Determine where your firm could use the extra support from an outside agency. Routine, mundane accounting operations like recording, collecting, tracking and adjusting make great starting points.
• Tax prep– Tax services are commonly outsourced by accounting firms, especially during crunch time from January to April. By outsourcing this function, firms better handle the increased workload without adding full-time employees to the payroll. Additionally, firms gain improved focus to ensure the accuracy and timeliness of their work. The in-house team will have more time for client meetings and complex tax issues.
• Fundamental accounting services– Elemental accounting services, like bookkeeping and reconciling, are frequently outsourced. Firms gain updated, accurate client financial records minus the burden of keeping the necessary documents, technology and human resources on site. Outsourcing fundamental accounting services also improves efficiency. The result is streamlined processes and real-time access and reporting capabilities using an outsourced firm’s cloud computing and other types of software.
• Payroll– Wages involve complex, time-consuming processes that require extensive knowledge of tax regulations and compliance. By outsourcing this task, firms can access specialized expertise and software that get the job done more efficiently and correctly. Firms can guarantee more accurate and timely paydays while diminishing risks, errors and penalties.
How to find the right partner
Relinquishing control is a tough decision. Seek advice from those who have been in your position. Accounting membership organizations are excellent resources for learning more about outsourcing thanks to their networking opportunities and informative content.
Interview several firms and get quotes. It might go without saying that the cheapest option isn’t always the best. The best choice is a partner who can handle the full spectrum of tasks you need. In addition, they’ll fulfill the following checklist.
An excellent vendor for your outsourcing needs will:
- Reduce your operating costs.
- Balance cost with quality.
- Include value-added extras like customer support.
- Have superb technical and human resources.
- Carry excellent reviews and references.
- Require minimal supervision from you.
- Reduce your firm’s liabilities and security/protection issues.
- Quickly respond and proactively communicate with you.
- Let you know your points of contact.
Bear in mind that some vendors might employ a foreign workforce operating out of a different country. The benefit of this setup is that the various time zones extend your firm’s working hours. The drawbacks may include language barriers and correspondence lags.
Benefits of outsourcing
Hiring a third party has many upsides. For starters, it’s often more cost-effective than interviewing and training new employees and adding them to the payroll (with the full suite of employee benefits).
Outsourcing can make more sense than purchasing, learning and maintaining new hardware and software. Accounting firms can scale up or back on services as needed with business fluctuations.
Next, CPAs save time once mundane and repetitive tasks fade from their schedules. They can use that time to focus on core business strengths instead. They can work on creative solutions to client issues and company growth or pursue career development opportunities with CPE credit courses. Overall job satisfaction will improve.
Employers enjoy higher retention rates. Clients benefit from the added value CPAs can pour into their accounting solutions. Everyone will enjoy a more enthusiastic and productive company culture.
Outsourcing gives firms access to a specialized team of experts with the necessary time and resources to unclog their workflow. Their expertise and attention to detail reduces errors, fraud, liability and compliance issues.
Accounting firms gain flexibility and agility when outsourcing accounting duties to a third party. They can more easily and swiftly adjust staffing needs, scaling up during busy seasons and back during potential lulls.
Consider outsourcing for staffing and expert support. It might be the answer for streamlining your operations, improving efficiency and adding value to your client relationships.
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