Previously on this blog, we explained what it means to outsource your bookkeeping or accounting. In this article, Sarah Daly takes a look at the business case for outsourcing.
Most growing businesses reach a point where they either need to hire someone to look after their bookkeeping, payroll and accounts, or they need to outsource these functions to a specialist service provider. As with any other business expenditure, before deciding which option is best for your business, it is important to examine the business case.
Cost is usually the first element to consider. You will need to compare the cost of hiring a staff member with that of using an outsourced service provider. As well as salary, remember to factor in the cost of benefits, training, office equipment and software.
Recruitment websites and online jobs boards will give you an idea of current salaries for accounts roles.
At the time of writing (updated 12 Jan 2022), a payroll manager in Dublin with 3-5 years experience can expect to earn €55k-€65k per annum according to the Morgan McKinley 2022 Salary Guide Calculator. An Accounts Payable Manager with similar experience can expect €50-€60k for a role in Dublin or €42k-€48k for a Limerick-based role.
Once you have an idea of the cost of hiring/retaining an accounts professional, you will then be able to compare this basic cost with the cost of using an outsourced service provider.
Accounting Software, Training
The next step in examining the business case for outsourcing is to look at the non-staff costs. These are likely to include things like software and the associated costs of maintaining and updating systems, office accommodation, training, and keeping up to date with the latest accounting, payroll and tax rules and regulations.
Often, when these are taken into account, smaller businesses find that it strengthens the business case for outsourcing as the outsourced service provider is able to share the costs of things like software and training across a number of clients.
Another factor to keep in mind when you are investing in an area like accounts which is an additional cost for your business, is that it’s important to ensure you will have the answers you need at your fingertips when you need them. Today, many businesses use realtime, cloud-based accounting solutions like Xero and SortmyBooks which make it easy to keep information accurate and up to date. However, your business records only really become valuable when you understand how to use them effectively. Good management reporting is essential when it comes to forecasting and deciding on strategy.
So, if you decide to hire a bookkeeper or an accounts employee, knowledge and skills are an important area to focus on. Remember good skills include communication skills as it is important that the person you hire is able to communicate effectively with you and your team. Of course, you want to be sure that they process your information on time and keep systems up to date, but you also want to ensure that they understand how to interpret your financial information and communicate it in a way that helps your business become more profitable.
When weighing up the advantages of having an in-house accounts team who work exclusively for you versus outsourcing to a specialist who works with other businesses, keep in mind that a specialist service provider can often provide valuable insight and reporting because of their knowledge of the trends affecting businesses similar to yours — for example, they may be able to tell you if you are spending more on certain services than your peers, if your sales and pricing are better or worse than your competitors, or if your payroll costs are out of line.
Key questions to ask when choosing an accounts or payroll service provider
For many owner-managed businesses and SMEs, when they weigh up the business case, the decision to outsource accounts and payroll becomes a ‘no-brainer’. However, it is important to choose the right service provider. Key questions to ask in this regard include:
- Where are they based? There may be risks to consider if you intend to use a service provider in another jurisdiction.
- What services will they provide and what is their pricing structure? For information on the services GroForth provides, check out this article on our payroll and bookkeeping services.
- What automation and reporting do they have in place and how will this integrate with your existing accounts processes and systems?
- Are their systems mobile-friendly?
- Do they provide realtime information?
- What security and controls do they have in place to protect your data?
- How user-friendly are they and what support is available if you have questions or need help?
- What reports can they provide and how will they improve your bottom line?
If you are considering outsourcing your accounts or payroll and would like more information about GroForth’s services, please get in touch. We’d love to hear from you.
[Article updated 12 January 2022]