In their earliest days, many small business owners will choose to take care of their accounts themselves. For some, this can be a helpful way to familiarize themselves with the inner workings of their business and its financial process. For many, it is simply a way to keep costs down until they find firm footing. But as the business grows, almost all will choose to hand over this task to someone else. At this point, a decision must be made as to who will be responsible for one of the most complex, but important, aspects of the business moving forward.
Assuming you are not one of them (very) few people who decide to keep taking care of the accounts, there is one main decision you need to make: whether to have someone do this work in-house or to outsource it. Each option has its own specific advantages and determining which is best for you will depend on your own needs and, to some extent, the resources you have available.
Cost is obviously one of the biggest factors behind any business decision, but particularly one that involves a potentially major expense such as hiring a new employee. If you’re going to take on such an expense, you need to know that you are getting enough in return to justify it. For the majority of small or medium-sized businesses, there simply is not the volume of work to warrant a full-time financial role.
The average bookkeeper’s salary in Ireland is around €33,000 a year, while the average accountant’s salary comes in at roughly €50,000. This is almost enough to hire 2-3 full-time employees on minimum wage. Then there are employee overhead costs, such as insurance, benefits, taxes, and space/equipment, which increase the cost of hiring an employee by about 20%.
As you likely already know, bookkeeping and accounting are not particularly easy tasks. They are complex processes that require various mathematical skills, an incredible eye for detail, and years of training to master.
One of the biggest advantages of building your own in-house team is that you can fill it with people who have experience in your specific field. This kind of approach results in a situation where you have a team of people who are not only good at their job but passionate too. But unless you have the resources to assemble a full team, you probably won’t reap these rewards with just one person.
Unless you’re willing to shell out top dollar for the best in the business, hiring one person will never get you the same level of skills that you will receive from a whole team of experts. Furthermore, when there is one person who is very clearly designated as being responsible for the finances, they tend to have very little in-depth oversight, and it is very easy for mistakes to go unnoticed. When the work is outsourced, however, you get access to a whole team of experts who not only have a great level of combined skill but have much more oversight as well, with the end result being that the work carried out is of much higher quality.
Bringing someone in to manage your books can be appealing for many reasons, not least of which is the ability to see that they are working, and working solely for you. Many employers simply feel more comfortable with having someone on-site at all times, with a vested interest in the success of that business. But apart from the costs associated with this, and the increased risk of mistakes, the argument can easily be made that this is a counterintuitive approach.
Firstly, if the workload simply isn’t there, then outsourcing will clearly be a more efficient and cost-effective way to get the work done. But regardless of the amount of work, assigning it all to one person leaves you in a vulnerable position.
Should they suddenly leave the role, you will be left scrambling to find someone with the right skills to come in and familiarise themselves with your accounts as quickly as possible. When outsourcing, you won’t have to worry about any of these issues. If one of the employees at the accounting firm is out or leaves suddenly, the work is simply handed off to the next equally qualified expert.
It is understandable why people would feel more comfortable around someone with whom they have a more personal relationship, but ultimately accounting firms need to strike the balance between quantity and quality of service, just like any other business, which means consistently providing the correct numbers on time, every time.
The final point is one that is not usually a major consideration for most people, even though it, unfortunately, should be. Unfortunately, research how shown that between 22 & 28% of businesses are victims of employee fraud, with small businesses being the most likely to be affected. And the longer an employee has been with a company, the more likely they are to commit fraud, and the greater the size of the fraud will be.
The complexity of the process can make it easy for someone who knows what they’re doing to hide the fraud from someone who doesn’t, which is why such fraud generally goes undetected for an average of 16 months. Such instances of fraud are far less common when the work is outsourced, not only because there is increased expert oversight, but also because their entire business would fall should they be shown to be inherently untrustworthy at executing their job.