Bookkeeping outsourcing services are in huge demand these days due to the burgeoning need for specialization. Accounting and bookkeeping services are being availed by most companies due to the expert attention and service that gets delivered through outsourcing it to a dedicated service provider. Among the list of tasks that an accounting firm takes care of, self-assessment tax is one of the most complex ones which is performed by these companies that helps them reduce a chunk of their already piled up workload. Undoubtedly the bigger benefit of outsourcing the accounting is the cost-effectiveness and companies achieve better quality, better bandwidth to focus on their core tasks, at a lesser cost.
In fact companies can choose from the range of services they want to outsource depending on the budget they have. A customized package is available always that lets them create a boutique of services that they need. Different pricing models offered by outsourcing companies are:
- Ad hoc model: The ad-hoc model is when the outsourcing company provides resources for the time the client company sets a price. Hourly rates of specific employees differ based on seniority. The model entails dedicated staff which work for a pre-determined time and works well when the company doesn’t have a large quantity of work. It ranges from 10 pounds per hour to 18 pounds per hour for accounting and 8 pounds per hour to 16 pounds per hour for bookkeeping.
- Full-time employee model: This is one of the more popular models. A full-time employee model is when an outsourcing company provides a dedicated employee at a fixed fee per month. The fixed amount is billed to the client company at the end of every month. The outsourcing company scopes the number of hours to be completed within the monthly fee. The model offers more control to the client company as they can plan and manage work for the full-time employee. It is more economical than hourly rates if there are high volumes of work and allows better budget management without the fear of cost escalation. However, major change in requirements can disrupt staffing. The model also requires vast managerial experience. It ranges from 1000 per month to 1800 pounds per month.
- Block- of Hours model: It is similar to the Ad-hoc model but here the company has to buy pre-paid block of hours. As hours are used, they are subtracted from the total number purchased. Large block of hours receive larger discounts but hours elapse if they are not used within the agreed period of time.
The cost which companies will have to incur depends on many variables. Such variables are company size and lifecycle, number of monthly transactions, number of employees and how payroll is processed, number of expense accounts, invoices to send out, bills to pay, number of balance sheets to reconcile and so on. In addition to these basic bookkeeping activities, the company costs will be affected by how the accounting systems, policies and procedures and reporting needs are set up and administered.
One of the important indicators of a growing company is the hiring of employees. To retain all the employees, the company has to make timely payment of the specified salaries. Many companies make the mistake of thinking that salaries are the only expenses they will have to bear. Hiring staff, especially in-house staff is costly. Apart from the salary companies have to bear costs such as:
- Recruitment cost: The recruitment includes cost of drafting the job specification, screening, initial calls, interviewing, onboarding, hand-over and training. Most recruitment agencies charge between 20-30% of the final salary.
- Training cost: New employees have to be trained before they can start performing tasks. Someone has to take time from their schedule to train the employees. However when the work is outsourced, things become easier as most outsourcing companies make sure that their employees are well-trained and skilled enough to handle intensive accounting tasks.
- Office space and equipment: When full-time employees are hired in-house, costs such as onboarding, purchase of furniture, office space and workstation expenses have to be borne by the company. If the work is outsourced, such costs will not arise.
- Management cost: The cost of managing the developing the in-house accountants is the most expensive and difficult. It includes yearly appraisals, staff meetings and providing feedback on progress.
By outsourcing accounting services, many of these costs can be reduced and even eliminated from the employee-related costs. If these costs are done away with, it will help the company save its resources and grow.