How Does Accounting Outsourcing Work?
Are you getting overworked while managing your accounting practice business? We are certain that the overwork word will be an understatement. Establishing a successful accounting practice in the UK is a great achievement but successfully keeping it profitable is a challenging task keeping in mind the competition you face in the market. Also, UK accounting standards and regulations set by HMRC have made your life difficult due to its complexity and strict enforcement. Surely, you would like to get out or avoid such a painful situation but how? The only best way is to outsource your accounting work.
Outsourcing! How does accounting outsourcing work in my favour? Well, there is no harm in trying it out after all it has worked wonders for your competitors. Ok, we understand, you would like to know more about the accounting outsourcing work before committing yourself to it. Let’s delve into the world of outsourcing and understand its importance, how accounting outsourcing work, how much it costs, its benefits, and how to choose the right outsourcing provider.
What Is Outsourcing in Accounting?
To understand in simple terms, outsourcing is a process where you hand over your client’s accounting responsibility to an external outsourcing provider instead of your in-house accounting staff. In other words, it means once you outsource accounting work you will be paying an external accounting outsourcing provider for handling your accounting tasks instead of paying to your in-house accounting team.
These days accounting practices are increasingly adopting or exploring the option of outsourcing, which combines the expertise of accountants with the latest technology to provide cost-effective and accurate solutions to your accounting needs. Under accounting outsourcing, an outsourced accountant is appointed to handle those accounting responsibilities which you have outsourced, so that you don’t have to look after it on a daily basis. This reduces your requirement for hiring new blood which is one of the major benefits of outsourcing but that’s not all there is more to offer.
Benefits of Accounting Outsourcing for UK Accounting Practices
By choosing to outsource you are opening the floodgates to multiple benefits for your accounting practice. The result of these benefits will be that you will be in a position to handle more work and tackle the most complex accounting responsibilities for your clients. Here are some of those benefits:
Saves Time
It is the major attraction of outsourcing accounting, especially for those who have limited workforce and huge workload. When you outsource your accounting responsibility you will be in a position to free yourself from daily accounting tasks, thus allowing you to focus on developing and expanding your accounting practice. It is also beneficial if you have a large workforce because you will not have to invest in new hirings which will save your time and allow you to focus on the training, development, and management of your existing team.
Cost Saving
Rather than having a full-time in-house accounting team, it is better to outsource partly or all of your accounting tasks, thus saving you from considerable cost. The cost of having an in-house team goes beyond salaries like benefits, training expenses, National Insurance and pension contributions, and so on. Also, there are a lot of overhead expenses in the form of office infrastructure and supplies, and accounting software. Through outsourcing you can avoid or reduce these expenses, which can be reinvested in value addition projects.
Getting Access to the Experts
Wondering why you would require an expert after all you must be in the business of accounting for a considerable period also you will have a well-performing accounting team. Still, recruiting an expert or getting its services through outsourcing is like an icing on the cake.
Accounting experts specialise in specific aspects of accounting which may not be the case for your average accountant. These experts possess ample knowledge and practical experience which will add value to your accounting services. With the help of experts, you will get critical insights and save time while doing the accounting process.
Continuity in Operations
There are multiple ways through which accounting outsourcing can help you in enhancing your accounting efficiency. If you outsource to a reputed and experienced outsourcing accounting service provider like Corient you will get access to a large accounting team, thus reducing your stress when your accounting team is unavailable due to sick leaves or annual leaves.
Professional service providers like Corient keep themselves updated with the latest accounting standards of the UK and implement new technologies. Such initiative reduces costs, avoids non-compliance penalties, and makes you more competitive.
Increased Focus on Core Services
We are aware that you have multiple duties for your clients when offering various accounting services. But you must have found yourself getting bogged down with these important but recurring responsibilities multiple times. Getting bogged with these responsibilities leaves you with very little time for research and development and service upgrades.
Once you get these responsibilities outsourced to a capable firm, you and your capable team can focus on service quality improvements and other core responsibilities. Adequate attention can also be placed on resolving customer queries, thus creating trust among your customers and creating avenues for expansion.
Scalability and Flexibility
One of the greatest challenges faced by every accounting practice in the UK is how to scale their accounting services. Such scaling capability is required to handle sudden accounting requirements from your clients. However, to achieve that you will have to expand your accounting team exponentially which will add strain to your resources.
To avoid potential financial drain, you will need to explore the option of accounting outsourcing. Through their service, you can avoid the need to recruit additional staff during tax season, thus preventing you from the situation of downsizing during the lean period. Understandably, there are multiple accounting practices which are facing this difficult situation and they have placed their trust in Corient which has considerable experience in handling multiple outsourcing challenges including scalability issues.
Full-Compliance
UK compliance requirements that include HMRC regulations keep updating and you are required to adjust accordingly. If any case of non-compliance is detected by regulators, then it will lead to penalties and legal cases. It’s better to avoid such a situation by taking the help of an outsourcing partner but before you select ensure that you evaluate your outsourcing partner’s capabilities and experience.
How Much Does It Cost to Outsource Accounting?
It’s difficult to give an estimate on how much it will cost to outsource accounting because it depends on several factors. Some of those important factors are:
- Size of your accounting practice and of your clients
- Your accounting needs
- Annual turnover
- Your accounting practice and your client’s locations
- Client’s business stage
It is to be noted that larger the size of your client’s business more will they require specialised accounting services which will increase your outsourcing cost. There are also multiple outsourcing models offered by service providers and your model selection will have an impact on cost. However, to get an actual outsourcing cost you will have to connect with each outsourcing service provider and understand their price structures and decide on the accounting model and services you want.
Tips for Choosing the Right Outsourcing Provider
You must be facing a difficult situation in finding new recruits and you are not alone after all 45% of accounting firms/practices are suffering from talent shortages. To fill this critical gap accounting service providers in the UK have started offering accounting outsourcing services. While it has provided significant relief to accounting practices in the UK many have complained that they did not get much benefits. The problem is not in outsourcing but in the selection of an outsourcing partner.
Some major mistakes are committed by UK accountants and accounting practices which leads to choosing a bad outsourcing partner. Therefore, we have taken the initiative and listed down some tips which will help you in choosing the right outsourcing partner.
Set Your Priorities
Before you set out to search for an outsourcing service provider make sure you know what you want. Identify the accounting tasks you need to outsource, such as bookkeeping, payroll, VAT, and others. Once you have the list of tasks to outsource, you can determine what you need and choose the accounting service provider that meets your requirements.
Verify Their Experience
Get the accounting experience of an accounting practice verified by getting access to their case studies and verifying it with their previous or existing clients. Also, check their expertise in UK accounting standards, compliance performance, and UK regulations.
Technology It Uses
Almost all outsourcing accounting service providers these days uses various tools and software to offer their services. However, a professional service provider will use the most advanced software tool, so check whether a service provider is using software like Xero or QuickBooks. An outsourcing service provider that uses advanced technology will be in a position to process your accounting tasks in a faster way.
Focus Data Security
Data security is absolutely critical these days, especially when you are dealing with sensitive client information. Hence, it is vital for you to check whether the provider is offering robust data security measures such as encryption, secure servers, and confidentiality agreements.
Understand their Communication Skills
For a successful partnership between you and your outsourcing partner, it is vital to have good communication. Hence, it is important to select a service provider that already has a communication plan. Keep an eye on whether it offers real-time updates, clear workflows, and a dedicated point of contact for query resolution.
Focus on Scalability
Choose a provider that can adapt to your needs as your firm grows or during busy periods like tax season. Scalability ensures you’ll always have the right level of support without overcommitting resources.
Frequently Asked Questions (FAQ)
Focus on choosing those task that are time-consuming, complex, and recurring such as bookkeeping, payroll processing, year end accounts preparation, and tax compliance.
All small or medium sized accounting firms are looking for reducing their expenses by ways like eliminating the need for hiring full-time staff and outsourcing will help in reducing hiring and offer access to expertise without much investments.
Reputed outsourced accounting service providers like Corient compile with data security laws like GDPR and implement measures like encrypted file transfers, secure servers, and non-disclosure agreements.
The main of outsourcing is to reduce your cost by eliminating the need for additional hiring and saving your training cost. In outsourcing you will only have to pay for services you use, making it very affordable.
Outsourcing will be very beneficial during the peak tax season by giving you a helping hand to manage the extra workload without any compromise in quality and deadlines.
Conclusion
Accounting outsourcing is the reality for accounting practices and accountants in the UK and it’s not going to go soon, especially with the complexity in the accounting field. Therefore, it is vital to have a better understanding of how accounting outsourcing work, this way you will be in a position to extract maximum benefits by choosing the right service provider. With full understanding of accounting outsourcing, you will be able to understand the cost you will incur and accordingly reduce the services you don’t require.
Finding a service provider in the UK is not a problem, finding the right one that will solve your issues is the problem. For this reason, we have provided you with some tips which will aid you while searching for the right accounting outsourcing partner. While there are many brilliant service providers in the UK but Corient is proving to be the best for accounting practices and accountants.
Established in 2011, we are an accounting outsourcing service provider based in Coventry and focused on providing the best accounting services to our clients, mostly accounting firms. We are experienced in offering a wide range of accounting services ranging from bookkeeping, payroll, year end to corporation tax and VAT services. Our tech-savvy accounting outsourcing services have worked wonders for many and we can do the same for you. Write down and send your queries and questions on our website contact form and our executive will get in touch with you at the earliest.
We are looking forward to a long-term association. Best of luck.