When you run an accountancy practice, providing top-notch service to your clients is the ultimate goal. You want to ensure their finances are up-to-date and compliant, and if you can offer tailored advice on financial planning and strategy, the better.
What this often means, however, is that accountancy practices branch out and offer more services than they can handle in a bid to be ‘comprehensive.’ The result? Mistakes, delays and a drop in the quality of your usual services, which means unhappy clients, which, in turn, means a decline in profitability.
The truth is the accounting world is evolving. The ‘conventional’ way of doing things is no longer the way to become successful. The rise of AI, ever-growing competition, automation, and the freelance economy have made it much harder to become profitable and maintain that level.
In this volatile climate a.k.a VUCA (Volatility, Uncertainty, Complexity and Ambiguity), how can you boost your bottom line? Do you double down and increase your clientele? Do you shift your niche or offer a broader range of services? You cannot always do everything on your own!
Eliminate stepping-stone services like bookkeeping.
Instead of moving straight to raising prices, evaluate each service you offer and divide it by the total amount of time your accountancy practice spends completing that task. Which one is delivering the greatest profitability per hour? In all probability, bookkeeping will be eating up valuable time for your staff – without driving higher profits.
It may be advisable, and even necessary from a profitability perspective, to rely on an outside expert to handle your client’s books of accounts from start to finish. So why outsource bookkeeping, you ask? Let us dive deep into the “why:”
But is bookkeeping not an essential function? Anyone can do it, right?
We would first like to clarify that there is nothing ‘basic’ about any aspect of bookkeeping. It is a core function for any business and requires a thorough understanding of accounting principles, experience with how they specifically apply to the client’s industry, meticulous attention to detail, a track record of accuracy and strong communication skills to guide the client through understanding why the financials add up as they do.
So, can you hire an in-house bookkeeper?
Good question. And if building a complete team of in-house talent is essential to your goals, go ahead and hire an in-house bookkeeper. Do not forget, however, that the salary you pay the bookkeeper is only part of what they will cost.
There is also the time and money involved in onboarding and training them, as well as any other benefits, their salary, pension, holiday and sick leave and so on. All of this requires considerable cash planning – and entails a cash outflow that you have to keep up even if your firm is not doing as well as usual.
By contrast, working with an outsourced bookkeeping firm entails a fixed fee every month. You get access to highly skilled, tech-savvy and experienced bookkeepers to whom you can assign projects immediately without any training period.
In case your firm is not doing well, you can easily pause the service agreement and resume when business picks up again. Plus, that fee you pay guarantees that they will deliver results as and when you want them – no unexpected vacation days or hold-ups due to staff meetings.
And when you pay lower fees for the bookkeeping, your client’s bills go down or your profitability increases – which is a good idea in either case. An outsourced partner will bring up anything they find dubious or need revision because the two of you are equals working towards the same goal – getting the client’s books in ship-shape condition.
As specialists, they may also notice specific details you may have missed about expenses, tax savings or eligible benefits simply because they’re looking at the client’s books with fresh and experienced eyes. This enables better collaboration and a stronger long-term working relationship.
And finally, outsourcing frees your team up to focus on your core service offerings, be they tax advisory sessions, start-up consultations, niche accounting services or anything else. Greater focus drives higher-quality results, which improves your profitability.
Benefits of outsourcing bookkeeping services
Suppose you are convinced by now that bookkeeping outsourcing is the way to drive higher profits; excellent! However, there are certain things to cover for the relationship to be strong.
You are still responsible for your client’s books of accounts, which means you need to choose a partner with whom you can work effectively. Keep the following pillars in mind when planning for the transition and to enjoy the benefits of outsourcing accounting and bookkeeping:
Talk to prospective bookkeepers and verify that they have the expertise you need for your client roster. In addition, discuss the software resources required for the collaboration, including accounting tools, security, document management and information exchange. As far as possible, choose bookkeepers whose suite of tools are most integrable with your own.
Agree upon the nature and frequency of updates, and ensure that the bookkeeper is always accessible through at least one channel of communication. You must also have full access to the books of accounts through an online dashboard – especially if you are collaborating on critical projects like end-of-year tax filing or periodic management accounts.
3. Fee structure
In most cases, a flat monthly fee structure is ideal when outsourcing your bookkeeping. Carefully examine the scope of work included in the fee, and check the surcharge rates in case the billable hours or work completed go beyond that scope. Price your bookkeeping services accordingly.
4. Service structure
This involves determining how the day-to-day of outsourcing relationships will work. Generally, it is a good idea to fully delegate the function and let the bookkeeping expert take over. Micro-managing or overtly frequent check-ins tend to reduce efficiency and create unnecessary friction.
Over to you
In conclusion, outsourcing is a profitable way to manage your client’s bookkeeping expertly without diversifying too much yourself.
Ask around about the top bookkeeping service providers, and do not be afraid to hire someone from another country or even a different continent. It is a global ecosystem, especially since the pandemic, and collaborating with the top talent worldwide is now easier than ever, like the Quickbooks, FreeAgent and Xero-certified Stellaripe accountants.
Get your books managed by us – at a quarter of the hiring cost of in-house practice staff. Seriously. Enjoy the benefits of outsourcing bookkeeping services. Contact us today!