Should You Outsource or Insource your Accounting?

Should you outsource a bookkeeping/accounting role or handle it in-house? This is a question that we help potential clients with every day! Unfortunately, there’s not one single right answer for every organization.
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Exploring your needs and expectations around the role will help to determine whether you should keep it in-house or whether it would be best to hire a third-party accounting provider to do it for you. Ultimately, the answer will depend on several factors – time needed, functions needed, and of course cost!

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​Time

• How much time do you need?

Think about how many hours it takes to do the bookkeeping and accounting tasks you need done. Perhaps this is a calculation of how long it’s currently taking to have the owner or someone else do this work in addition to their other responsibilities. Perhaps this is an estimate based on how much work needs to be done that isn’t getting done because everyone is too busy to do it. Perhaps it’s a combination of the two – the number of hours being spent on these tasks already plus the hours needed to get things cleaned up and streamlined for better efficiency. Do you have enough hours to justify hiring a bookkeeper or accountant?

There’s no “right” answer to this question because the answer will vary based on things like company size, industry, business stage, transaction volume, accounting systems, automation, existing staff capabilities and availability, and so on. Typically, if you need less than three days per week (or about 25 hours total) it will make more sense to use an outsourced accounting solution. Otherwise, it is often prudent to hire an accountant internally.  

Functions

• What do you need done?

You also need to consider what kind of work you need done because that can help shape your decision as well. It may surprise you to learn this but not all accounting work is created equal!

While most accountants can do most kinds of general accounting work, not all will want to. This is important to understand specifically in the context of clean up work. If you are behind in your accounting,  you will likely need to outsource the work (at least initially) because most candidates will not be eager to accept a role where they will need to come in and fix everything before getting started. And with the current accounting industry shortage, accountants can choose to be picky about the roles they accept. An accounting consultant can be brought in on an interim basis to perform a “fixer” role before a full-time accountant is hired, giving you greater success in your full-time hiring endeavors afterwards.
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Similarly, accounting “grunt” work like routine bookkeeping (account reconciliation, invoicing, billing, etc.) isn’t going to get top accounting talent too excited about the role. For this reason, it makes more sense to outsource accounting work like this to a third-party provider that has the resources to help you streamline these functions through your accounting platform so you can look for a candidate to handle your higher level, more value-add type of accounting work.

However, very specialized work like fraud prevention, tax planning, audit, and investigative accounting should be outsourced to leverage the impartiality and expertise of third-party accountants that concentrate specifically on these areas. Trying to handle these kinds of accounting functions in-house risks opening the process up to bias as well as compromising the effectiveness of the work being done. 

​Cost

• What can you afford to pay?

The biggest objection to accounting outsourcing we hear is around the cost. But as our team always explains, “Business owners often think they are cutting costs by doing things themselves instead of hiring them out. However, outsourcing business processes can result in cost savings due to improved efficiency and business outcomes. Furthermore, hiring a third-party provider is frequently less expensive than hiring the same personnel in-house.” Remember, there’s a significant cost to insourcing as well that you will need to budget for if you decide to hire an accountant rather than outsource the work to a part-time accountant. Hiring an accountant in-house means paying for:

• Search costs
• Relocation (where necessary)
• Training and onboarding
• Salary
• Benefits
• Payroll taxes
• Bonuses and raises

And those costs only apply once your company has identified a candidate that’s a good fit for the role, which can take considerable time in today’s hiring market. In some instances, companies find that they either can’t find a candidate that meets their requirements at all, or they can’t find someone with the right credentials that fits their budget for the role.

Outsourcing offers a cost-effective way to get access to an experienced accountant that has the expertise your business needs when it needs it. Not only are the upfront costs much lower than hiring in-house, but the ongoing costs are significantly lower as well. Having the option to only pay for what you need as you go ensures you are effectively managing cash flow while investing in the future of the business. 

Now, anyone who has considered outsourcing their bookkeeping or accounting before can tell you that there’s a wide range of pricing related to these kinds of services based on:

• How much time you need
• What kind of functions you need performed
• How much experience you’re looking for
• Whether the service provider is domestic or international
• Where you want the work to be done (in-office, remote, or hybrid)

​However, this is not an area where you want to try to cut corners by finding the lowest possible price. Instead, prioritize experience and reliability! You will certainly see better results in the long run when investing well in your organization’s future. 

Explore the Benefits of Outsourced Accounting

​When you need outsourced accounting services, we can help! Since 2006 we have been an industry leader in accounting outsourcing and recruiting with customized solutions to meet your specific needs. Our US-based team offers top-rated accounting solutions for businesses and nonprofits alike. Contact us today to find out more about outsourcing your accounting functions to add value to your organization!