In their earliest days, many small business owners take care of their accounts themselves. For some, this can be a helpful way to familiarize themselves with the inner workings of their business. It also helps them to know the financial process. For many, it is a way to keep costs down until they find firm footing. But as the business grows, almost all will opt to hand over this task to someone else. They must decide who will be responsible for one of the most complex but important aspects of the business.
Assuming you are not one of them (very) few people who 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 disadvantages. And determining which is best for you will depend on your own needs and the resources you have available.
Weighing Up The Cost
Cost is, obviously one of the biggest factors behind any business decision, but one that involves a potentially major expense is hiring a new employee. If you will take on such an expense, you need to know that you are getting enough in return to justify it. For most small or medium-sized businesses, there is not sufficient work to warrant a full-time 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. It increases the cost of hiring an employee by about 20%.
Weighing Up The Potential Quality
As you likely already know, bookkeeping and accounting are difficult tasks. They are complex processes that require various mathematical skills, an incredible eye for detail, and years of training to master.
Building your own in-house team offers many advantages. One is that you can fill it with people who have experience in your specific field. We get a team of people who are not only good at their job but passionate too. But you can’t reap the rewards with just one person if you don’t have enough resources.
Hiring one person will never get you the same level of skills that you will receive from a whole team of experts. When they do not designate a specific person for finances, they have very little in-depth oversight. Their mistakes are likely to go unnoticed. When you have access to a whole team of experts, you get a package of a great level of combined skill and much more oversight. So, being that the work carried out is of much higher quality.
Factoring Efficiency In To The Equation
Bringing someone in to manage your books can appeal for many reasons. Not least of these reasons is the ability to see that they are working solely for you. Many employers feel more comfortable having someone on-site at all times. They link it with the vested interest in the success of that business. But apart from the costs associated, and the increased risk of mistakes, we can make an easy argument that this is a counterintuitive approach.
First, if the workload isn’t there, then outsourcing will 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 employee at the accounting firm is out or leaves suddenly, it hands one 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 Risk Of Employee Fraud
The final point is one that is not usually a major consideration for most people. Unfortunately, research how shown that between 22 & 28% of businesses are victims of employee fraud. Amongst this, frauds are most likely to affect small businesses. And the longer an employee has been with a company, the more likely they are to commit fraud. And also, 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. Therefore, such fraud goes undetected for an average of 16 months. Such instances of fraud are far less common when we outsource the work. Not only because expert oversight is increased but also because their entire business would fall if they are involved in scams. It will depict them as inherently untrustworthy at executing their job.