Should You Outsource Your Accounting Or Do It In-House?

As your organisation expands, you have some important decisions to make regarding your team. Taking on new hires costs money. However, it is a necessity if you want to remain productive and efficient. Knowing when to hire employees can be difficult to determine, especially when it comes to the roles you have been performing yourself. A common position many business owners take on is that of an accountant.

While this can work out fine for the early years, once growth sets in, the nature of accounting becomes more complex and demanding. You actually have two choices when you reach this juncture:-

Option 1: Hire an in-house accountant; or

Option 2: Look for an outsourced accounting service that specialises in the financial management of organisations (i.e. not just tax/compliance). 

Here are a few ideas to determine which is right for you.

Pros and Cons of the In-House Accountant

If you are thinking of  hiring your own accountant, or accounting team, consider the following pros and cons:-

Pros

• Hiring your own accountant provides you with someone who becomes a part of the team and shares in the organisation’s culture;
• Often an in-house accountant feels more invested in and accountable for their work. The reason being  you, as the business owner,  are providing them with a salary;
• In-house accountants are there when you need them, providing ongoing support and information in a timely manner; and
• You might feel you have more control with an in-house accountant.

Cons

• You are faced with the challenge of finding someone you can trust;
• It can be hard to find the right “fit” personality-wise with an accountant;
• It takes time to post a job, sort through resumes and interview for the position if you manage the process in-house. If you engage an external recruiter, the recruitment fees can really start to add up;
• If your organisation expands, your accountant may not have the bandwidth to manage the increased workload. Therefore, you need to keep hiring to meet the organisation’s needs;
• They can churn, meaning they may leave your organisation after a short period of time if there are not sufficient growth opportunities or other avenues for career progression. This often sees you back at the recruitment stage, where time is spent on hiring the new staff member and potentially learning a new set of processes and procedures they implement. The cycle repeats;
• You still need to dedicate time to train, supervise and interact with an in-house accountant, which can continue to take away focus on your core business;
• In-house accountants are employees and, as such, might not feel it is their place to point out issues with your current set up or where you can find opportunities for improvement;
• It can cost more to hire a full-time employee, particularly when it comes to providing  professional development,  career-building opportunities, employee benefits and more;
• You might feel uncomfortable reducing their hours if you are unable to provide them with enough work to complete; and
• It can be harder to humble yourself and ask for clarification from an “employee” if you don’t understand the numbers.

If you have a small organisation and are not ready for a major expansion, then an in-house accountant might be appropriate. However, if you have your eyes set on growth, or are currently already becoming a medium-sized business, then you may find an in-house accountant won’t meet the demands of your growing business.

Pros and Cons of an Outsourced Accountant

If it seems you need someone with a broader range of skills who can take more control over your finances, an outsourced accountant offers the following pros and cons:-

Pros

• No need to waste time invested in the hiring process;
• You are paying for a service designed to free you up so you can focus on following your passion and focusing on your core business;
• Outsourced accountants are focused on their role and won’t necessarily feel limited by the input they offer to help improve your business’ profitability and cash flow;
• You don't  face  training or supervisory demands, so you have more time to focus on other business functions;
• Your accounting function remains more scalable to meet the growing needs of your business;
• Outsourced accountants can help resolve employee productivity issues;
• You can use them as often or infrequently as you like. Engagements can be tailored to suit the needs of your business; and
• With more free time you can achieve a better work/life balance.

Cons

• You may experience a  lack of control over your finances; and
• You may think an outsourced accounting service charges more at first glance.

If you are all about growth and want to benefit from the expertise of an experienced accountant, then outsourcing probably makes the most sense for you.

Key Considerations: Outsourcing vs In-House

To help make the right decision for your accounting needs, consider these factors:-

• Cost:- overall, you might find the cost to hire a full-time accountant is more expensive than outsourcing. Often you can choose the payment set up to suit your needs based on how much time is required. You can craft the terms of engagement that work well for you and adjust the hours required as demand levels change. This keeps the service scalable in relation to your earnings;
• Quality control:- while it might seem at first you maintain more quality control with an in-house accountant, that can come at a cost. You need to invest the hours to keep an eye on what they are doing. Outsourcing services tend to make themselves available when you need them while also ensuring they always use accounting best practices to remain compliant with industry standards and their professional duties; 
• Consistency:- you will have more consistency by outsourcing because outsourced accounting services have policies in place to ensure their service is precise and highly accurate. You might hire an accountant who lacks organisational skills. This can turn into a nightmare where  inconsistent work becomes hard to follow and can lead to  a growing risk for inaccuracy and errors;
• Dependability:- in-house accountants can call in sick, go on maternity leave, or simply resign at short notice. This can leave you high and dry with books that make no sense. Outsourcing always ensures you have an accountant working for you, without the worry of sick calls or being left without an accountant when they leave;
• Loyalty:- you never have to worry about loyalty with an outsourced service as they aren’t seeking better clients or opportunities like an in-house accountant. An outsourced accountant appreciates your business and is committed to the work they perform for your business;
• Availability:- while an in-house accountant will adhere to a certain number of hours a week, once they are done for the day, they are done for the day. Outsourcing provides a service and therefore is available when you need them should something urgent come up.

Our team at Bonitas Partners Pty Ltd understands that accounting is not your core business. Our goal is to free up your time, so you don’t have to worry about accounting-related issues. Instead, you can focus on running your business. We offer real value for money with solutions that help reduce your overhead cost. We can do more than fill an accountant’s seat.

We can assist with restructuring your accounting function if required. We don’t play games and we bring true value to your business. Our recommendations are always clear, and we don’t always tell you just what you want to hear, but instead what you NEED to hear.