The benefits of outsourcing company accounts can be substantial in terms of financial savings and productivity.
What it is
Outsourcing accounts can involve the outsourcing of bookkeeping, VAT returns, PAYE services, account management, cashflow recording and tax return services.
Outsourcing your accounting can provide significant financial savings in time and staffing costs, while also helping you to make use of the knowledge and technical resources of another organisation. However, it is crucial that any account outsourcing is managed and monitored with care; any problems that arise could reflect badly on your business’ financials and reputation.
Need to know
As with the outsourcing of any of your business’ functions, you need to research your options carefully, manage the relationship with the outsourced team well, and put in place well-defined service level agreements (SLAs). If you don’t feel your supplier has delivered on what you agreed, an SLA should protect you. A commercial lawyer can help you draw up this agreement if needed.
Pros and cons
There are several advantages to outsourcing your accounts. Firstly, you can concentrate on your core business; the company you outsource to will do nothing else but accounting and so is likely to have more expertise than you in the area. Secondly, it takes away the need to invest in full-time staff and accountancy software, and thanks to low labour costs in many outsourcing centres, the cost to your business should be relatively low.
On the downside, handing over control of part of your business can be problematic and detrimental to your business if poorly managed. Ensure that you research the outsourcing company thoroughly and that you are protected by a meaningful legal contract if you decide to go ahead. Equally, it is important to make sure that all account data is stored and backed up safely to protect against theft or loss.
What’s the cost?
The costs of outsourcing accounts vary, as does the level of service provided. It is possible to hire an outsourced account or accountancy team by the hour, or just pay a set price each month. For example, Iris, which outsources services including book-keeping, payroll and end of year accounts to India, agrees a monthly commitment with the client, ranging from 25 to 100 hours, and charges depending on the level of service required. Integra, which also outsources to India, offers the services of a junior accountant at £5.95 an hour and a senior accountant at £7.50 an hour. The price for an exclusive full-time junior accountant is £952 a month. For a full-time senior accountant it is £1200 a month. A list of UK outsourcing companies can be found at FreeIndex: www.freeindex.co.uk/searchresults.htm?k=account_outsourcing
What next
A trial period of account outsourcing can help you decide whether outsourcing works for your business needs. Many outsourcing companies also allow for a phased build-up of the outsourcing work, which allows you to tweak or change the service level you require as needed.
For further advice visit the National Outsourcing Association at: www.noa.co.uk
The following resources may also be useful:
www.sourcingfocus.com – an online resource on outsourcing
www.outsourcemagazine.co.uk – a resource that focuses on outsourcing news, analysis and reviews