Get A QuoteCan you still make a profit if you outsource accounting functions?
Our clients are practical people, and when it comes to outsourcing, one of the first questions they tend to ask is: “Can an accountancy firm ever outsource some of its own accountancy services profitably?”.
Well, the answer is an emphatic yes; and, actually, outsourcing can drive your profitability in many ways. Let us explain.
Outsourcing core functions
When it comes to outsourcing accountancy services, the first thing that springs to mind are those repetitive tasks that are often the bread and butter of any firm:
1) Annual accounts
2) Bookkeeping
3) Self-assessment tax returns
4) Payroll and PAYE
5) VAT
Companies which specialize in outsourcing these functions will have developed highly refined systems. This means they can carry them out so efficiently that, even after their fees are charged, you can still add a margin and be competitive.
However, the degree of refinement in outsourced systems brings other benefits to you.
They tend to be resilient – meaning that they will still function well when things go wrong, say members of staff are off sick.
They tend to be scalable, meaning that no matter how much you grow (or if you were to lose a big client) they will adapt and work seamlessly. You don’t have to worry about hiring and firing.
They have built-in quality assurance procedures and multi-company experience – meaning that they will better detect human error or, more seriously, fraudulent activity.
In addition to these qualities in the outsourced company, you also save overheads in office space and equipment, as well as all the more direct costs associated with employing staff in-house.
Freeing up time for marketing and business development
Beyond saving money in overheads, you also free up time – your own, and that of team members – which can be spent on higher value work or marketing and business development.
Of course, the overall objective of most marketing and business development is to grow the business.
So freeing up your internal resources and allocating them to these activities should naturally lead to improvements in profitability.
Spending time “on” the business, rather than “in” the business is an oft-heard coaching mantra, and most people find it makes for a more interesting experience in running a company: getting out from behind the desk to network, meeting new clients and becoming more involved with your creative marketers. It’s all the more easy to do when you outsource.
Outsourcing value-added services
A more recent trend in outsourcing is through creating partnerships to expand your line of services. Pick the right fields to enter and this has dual advantages for you.
First, you are (and are seen to be) meeting market needs. Not only does this open the door to winning new clients who may not otherwise have considered working with you.
But it also protects against churn in your existing book of clients, where some may think of moving away from you because a competitor could better meet their needs.
The kind of services we are talking about are tax planning, virtual accountants (including management accounting), pensions advice and R&D tax incentives. As well as potentially bringing new offerings to your repertoire, the second advantage is that they are also typically higher value services on which you can make more profit, even when outsourcing.
Find out more about outsourcing
Our specialist outsourcing services are designed to ensure they retain profitability for you – both directly on the margin, and also indirectly by protecting and enhancing the lifetime value of your clients.
You are giving them more ways to hire you in the first place, more opportunity to buy from you during their business lifecycle and more reason to stay with you over the long term.
To find out how outsourcing can benefit your firm, talk to us.
