How Much does it Cost to Hire a “Cheap” Accountant?

Time and time again we have clients come to us expressing regret over their accounting hiring decisions. They say things like:

“…We hired what we could afford and the person we brought in is totally underqualified…”
“…We’ve had so much turnover in the role – we just can’t keep anyone, and we don’t have the budget to get someone who will stick around…”
“…We simply can’t find what we’re looking for these days at the price we’re willing to pay…”
“…We put off hiring because we didn’t want to spend the money before, but now we’ve waited far too long and we need to find someone immediately!..”

​The lesson here is clear – trying to cut costs with accounting hiring is always going to cost more in the long run! Let’s look at why hiring a “cheap” accountant is actually more expensive than hiring a good accountant and how you can improve your hiring strategy. 

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​Understanding The Cost of a Bad Hire
Underpaying for your needs by hiring someone who isn’t qualified to do the work you need them to do will only result in inefficiency, errors, and ultimately turnover, all of which are incredibly costly! As our team explains when discussing the cost of hiring an accountant,

There is a substantial cost for bad hires when employees are a mismatch for the role or the company. In a recent survey, 25% of employers reported that a bad hire cost the company more than $50,000 due to lost productivity, time needed to find a replacement, diminished workplace morale, and brand damage with customers. In the case of an accountant, this cost could be even higher due to the nature of the job. Financial errors can result in serious consequences such as cash flow issues, tax penalties, state or federal fees, and damaged vendor relationships.

There can be a steep financial cost that a company or nonprofit incurs when their accountant is the wrong match for the role, the least of which is the cost of turnover. When an accountant is a bad fit for the role and either leaves or is let go, there are significant recruiting costs (both in the form of time and money) to consider. These may include any of the following:

• Posting the job or hiring a recruiter.
• Evaluating resumes.
• Running background checks and checking references.
• Travel expenses (if an in-person interview is done).
• Signing bonus.
• Relocation costs.
• Onboarding and training.

For these reasons alone there is considerable financial incentive for organizations to hire well from the beginning. However, let’s look at another type of expense that companies often unknowingly incur by trying to hire a cheap accountant.

Calculating Cost of Vacancy
Trying to hire an accountant for less than they are worth will inherently make the process take longer than it would otherwise. Whether you are looking for a bookkeeper that you can coach up into the role eventually so that you don’t have to make room in the budget to get full-charge accounting experience upfront, or you are holding out hope that you will find an accountant who is willing to work for below market value, it’s going to take time. And, as the popular saying goes, “Time is money!”

The cost of vacancy for an accounting role can add up quickly. As Perry Paden explains, 

Every day we work with companies that need to hire an accountant or finance professional. One of the things we see over and over again is that hiring managers are largely unaware of how important it is to minimize the amount of time that a role remains vacant and how quickly they need to move once they have found a good fit.

​Cost of vacancy (COV) expenses include not only salaries, benefits, and overtime but also impacts on the team’s morale and organization’s culture. To put hard numbers to these costs, we developed a COV calculator tool. It indicates what the cost of completed work is that would be done in the time that the role is left open based on several customizable criteria to give an accurate cost picture.

Try the COV Calculator now!

For example, an accountant making $75K annually has a cost of vacancy of approximately $1,000-1,700/day (depending on different factors). Given the national average of 42 days to fill an accounting vacancy that equals roughly $43K-72K for a typical open accounting role.

A Better Solution
When you have budget concerns, there’s a better approach to take than just lowballing your open accounting role and hoping that a miracle will happen. Understand that it’s going to cost far more in the long run if you try to cut costs during the hiring process because frequent turnover and vacant roles have high financial and time costs.

Instead, work with a recruiter to understand how much the role you need is going to cost and then be prepared to pay it! A recruiter will help you to understand what you truly need so you can hire for your exact needs (no more, no less) and avoid overpaying for experience or a skillset you don’t need. An accounting recruiter will also get someone into the role faster than you would when handling the hiring process internally, which reduces the COV.

When working with an experienced recruiter you will not only save money but the candidate you hire will likely also be a better fit for the role, thereby reducing the likelihood of experiencing costly turnover in the immediate future.

When you need to hire an accountant, we are here to help! Our accounting recruiters can help you to hire an accountant for an in-house role, while our team of accounting consultants can offer the outsourced accounting services to handle your day-to-day accounting needs. Whether you need someone full-time or part-time, in-house or remotely, we can get an experienced accountant into the role quickly! Our team provides a wide range of accounting solutions to meet your company’s unique needs. Contact us to find out more!