Balancing Act - Which parts of your accounting team should you outsource?

Whether you are a small enterprise struggling to keep up with mounds of paperwork and changing tax regulations or a larger corporation looking to free up valuable staff time, outsourcing makes good business sense. For those businesses looking to relieve their accounting and bookkeeping staff of the time-consuming minutiae which inevitably eats into their day, a few pertinent questions need to be addressed.

  • What are the advantages of outsourcing your accounting and bookkeeping?
  • Which areas will have the largest financial impact and prove to be the most viable solution, both in the short and long term?
  • What are the pros and cons of outsourcing locally, as opposed to offshore (overseas)?

Taking each of these questions separately, let’s take a look at how your business practices can be streamlined to make them more efficient and cost effective through strategic outsourcing. 

Advantages of Outsourcing Bookkeeping and Accounting Services

Consider these key areas where businesses can benefit from outsourcing their bookkeeping and accounting.

  • Time: Outsourcing can take over the low grade task which drain man hours
  • Money: Cost savings from
    • Dedicated staff at a fraction of the cost of hiring permanent staff
    • No absenteeism, employee benefits or recruitment expenses
    • No office supplies or equipment expenses
    • No training or handover salary costs
    • More efficient use of in-house staff’s time
  • Knowledge: Outsourcing gives you access to a large pool of diverse expertise.
  • Scalability: One of the most significant advantages is the ability to grow or contract with your business requirements, without the need to hire or fire staff.

  • Adaptability: With a team of experts, outsourcing provides proficiency in all major software systems.

Viable Solutions

This leads us to the question – which processes make the most financial sense to outsource? The answer depends on whether you currently have a bookkeeper or accountant, in-house. If you are an SME reluctant to commit to employing a permanent staff member, then outsourcing all your financial work to a third party can be an economically viable solution. According to Seek, the average annual basic wage for a full time bookkeeper in 2016 was $62,425. What isn’t revealed in that figure are the hidden costs of that employee, such as:

  • Superannuation: Minimum contribution of 9% = $5,620.5 per annum
  • Annual leave: Effectively costing a business one month’s wages, along with the cost of another employee filling that role = $5,202
  • Worker’s compensation = upwards of $3,000 per annum
In addition to this are the ancillary costs per employee such as IT hardware and software, recruitment fees, office furniture and potentially, payroll tax. The true cost of a full time bookkeeper may in fact, be well over $80,000 per year, which breaks down to a substantial, $40 per hour. Compare this to Befree’s cost for a full-time resource of $35,000 per annum. This equates to just $17 per hour and the rate for casual bookkeeping is just $28 plus GST per hour – no entitlements, no overheads! You don’t have to be a bookkeeper to see that outsourcing, is highly cost effective. Alternatively, for companies looking to improve business performance, streamline their work processes and free up staff resources – outsourcing mundane, labour intense tasks, is an attractive option.

Some key areas that can be delegated to a third party include:

  • Catch up work: A short term fix which will enable you to get backlogged work up to date and get your overdue financials out of arrears
  • Data entry and processing: Allocation of ledger and accounts to transactions
  • Accounts payable and receivable
  • Reporting: Producing financial statements, cash flow, profit and loss and balance sheet reports
  • Reconciling accounts
  • Payroll services: As a long term solution to time-consuming tasks, such as:
    • Managing time sheets
    • Processing payroll payments to employees
    • Preparation and issue of payment summaries
    • Processing deductions to external bodies e.g. health funds, superannuation, PAYG tax and garnishee debts
  • ATO tax compliance and preparation – including:
    • Tracking and lodging BAS to report GST and PAYG

Local or Overseas – weighing up the facts

As anyone with a phone would know, it is now common practice for Australian businesses to outsource much of their lower grade work, overseas. This practice is not restricted to call centres but has now extended to a myriad of other industries, including customer service, manufacturing and financial services. The practice of outsourcing offshore whilst a viable solution must be tempered by a strong local presence to monitor, manage and maintain service standards. Many businesses are embracing the trend to shared outsourcing, mitigating the drawbacks yet capitalising on the benefits.

Examples of this are:

  • Risk management: The burden of liability is assumed by a third party, rather than in-house
  • Loss of control: Due to geographical constraints and time differentials. With the benefit of an Australian Head Office and on the ground staff, real-time service is at your fingertips
  • Communication barrier: Non-Australian workers with restricted understanding of the English language. Not an issue when dealing directly with Australian based account managers
  • Risk of subpar performance and accuracy: Alleviated by the supervision and monitoring of all work by a team of qualified accountants in Australia
  • Financial outlay: This can be substantial for companies directly involved in transitioning offshore. Utilising an Australian based outsourcing firm, absorbs this expense.

Outsourcing provides cheap, efficient and accurate staffing solutions without the overheads. The flexibility of outsourcing means that you can optimise your business processes on an ‘as needs basis’ or as a permanent accounting solution – securely and safely. befree is a CPA accounting firm and registered Tax Agency, with our management team based in Australia. Our unique business approach develops tailor-made strategies to optimise your experience, through a process of:

  • Reviewing
  • Mapping
  • Implementing
  • Supporting

The value of cost-effectively outsourcing your financials to a certified, professional and experienced team like befree Australia, can dramatically impact your bottom line. This effective solution guarantees that you will have peace of mind, knowing that your business finances are in capable hands – giving you the freedom, to get back to what you do best.

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