In Pursuit of Profit
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![]() As a business grows, staffing requirements increase as well. For smaller companies, each incremental hire becomes less critical because there is a wider system to support new employees. However, while the company is in its infancy every hire is vital. Large organizations have the advantage of being able to list numerous positions at once and let their HR teams work through a continuous pipeline of potential employees. Better cash flow and continuity planning allows large companies to both wait for the right candidates and also hire before there is a dire need for more staff. Small businesses, however, often delay hiring for as long as possible to minimize employee-related expenses. The result is that smaller companies typically need to hire more quickly than their larger counterparts because they wait longer to begin the candidate search. This urgency can lead to hiring a candidate that is either less qualified or less committed to the company. While hiring in-house is a costly process, a bad hire is far more costly. Smaller companies frequently overlook the benefits of outsourcing job functions instead of hiring in-house. The key advantage to outsourcing professional roles like accounting and finance is the ability to forgo the costs of recruiting, onboarding, and retaining employees. Recruiting CostsAccording to recent data, hiring a new employee costs an average of $4,700 (a 14% increase over 5 years ago) and 44 days (a 83% increase over the same time period). With specialized roles like accountants these numbers likely underestimate the true cost significantly because the industry is still experiencing a significant talent shortage, which will certainly command a premium in the labor market. However, even this figure fails to consider the risk of hiring in-house. There is a substantial cost for bad hires due to lost productivity, time needed to find a replacement, diminished workplace morale, and brand damage with customers when employees are a mismatch for the role, or the company. According to recent data, The exact monetary cost of a bad hire varies based on several factors like industry type, employee salary, recruiting resources and onboarding and training expenses. The United States Department of Labor says a bad hire can cost your business 30 percent of the employee’s first-year earnings. Some human resources agencies estimate the cost to be higher, ranging from $240,000 to $850,000 per employee. What’s worse, the monetary cost of a bad hire can skyrocket if the employee becomes disgruntled and engages in litigation. Then, your business would be on the hook for attorney fees and, potentially, financial damages. 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.
Employment Expenses
If everything is working well and you get accurate and timely reports, you may feel there’s no reason to make a change. After all, if it’s not broken, why fix it, right?! However, if you notice problems, gaps, or errors, you might need to consider adding a new (or another) accountant to your team. Unfortunately, the cost of hiring an accountant in-house can quickly add up. But there is another option! You can outsource your accounting needs to our team. We offer reliable outsourced accounting services remotely or onsite, to meet your needs. Contact us today for more information!
Originally published: 3/11/19 Updated: 10/14/24 |
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10/14/2024