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Is outsourcing the answer to the skills shortage? Part 1

7th May 2024
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Are you running an accountancy practice? Or is it running you?

AVN helps you to take back control of your practice.

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The difficulties of recruiting new team members look set to continue for the foreseeable future. Outsourcing is one way to tackle the problem but does it really work? AVN’s Emma Slack looks at what makes a good outsourcing strategy.

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Almost every business does some outsourcing. In fact, you’re probably doing it already, without realising it. You outsource work to the software on your computer, work that was once a time-consuming manual effort. And many accountants outsource to sub-contractors locally in the UK.  The principle is the same. You could even say you outsource to your team; the paying relationship is different but that’s all.

Outsourcing has many advantages, not least the access to new talent when recruitment is so challenging. It can also be very cost-effective, improve turnaround times, take stress away from your existing team and free up your time to focus on added value services and customer experience.

But to reap all these benefits you have to start from the right place.

For detailed insights on how to get this right, watch Emma’s recent webinar: Outsourcing – How to plan, prepare and execute

5 questions to ask yourself before you outsource

  1. Why might you want to outsource work? Is it to allow you to focus on added value work or to take on more clients?
  2. Will the extra time/fees you earn cover the cost? Is cost less of an issue because this is a lifestyle choice?
  3. Would you be better off selling a chunk of fees that are less profitable and causing the overload of work?
  4. Are you prepared to invest the upfront time needed to properly brief the outsourcer? 
  5. Do your existing team see this as a threat to their jobs or as an opportunity to develop their roles and focus on client relationship building?

The clearer you are on your answers to these questions, the better chance there is of a successful outcome.

Once you’ve decided to go ahead, here’s how to get off to a good start.

First steps to outsourcing

First, decide on the kind of work you want to outsource. Is it bookkeeping, accounts preparation, payroll, something else?

Next, work out how long each job should take and whether you want it done on your own practice software. Bear in mind data protection and GDPR requirements. This is something that your outsourcing provider should cover so make sure that they address any concerns you have.

What’s the end result you want to see? Draft accounts? Trial balance? With or without benchmarking report?

Get a good idea of exactly what you want to delegate and how you want it approached. Some outsourcing businesses will have a standard way of doing things but others will adapt to your systems. 

Choosing your outsourcing supplier 

A useful exercise is to send a set of accounts to at least 2 different outsourcing companies.  It’s even better if you complete those accounts yourself too. That way you can compare what you get back from the outsourcers with your own results. This will help you to assess the quality of their work and also where you need to improve your scope and communication to them. I would caution against expecting perfection on the first go. It’s like taking on a new team member, even if they’re highly experienced and qualified, there are certain nuances that are important to the practice owner. So allow for teething problems.

  • Use a simple scoring criteria so you can compare the different outsourcing suppliers. For example, timescale, price, communication, quality of work returned
  • Review and compare their policy on what they will do when something doesn’t go as planned (i.e. turn-round time on errors etc)
  • On no account send them your ‘worst’ client records. If you find them difficult you can’t expect someone else to get them perfect first time!
  • Many accountants use more than one outsourcing company so that they can switch between them during busy times or when expertise is needed.

Ensure the outsourcer is suitably qualified and regulated

The outsourcer will will assign you a team to work with so take a look at their CVs. In particular, look at their experience rather than their qualifications. Someone with several years’ experience and who understands how the outsourcing process works is likely to be better than a qualified person with no actual experience.  

If possible, have a video meeting with the individual/team members you will be working with; they will be part of your team so it’s good to get to know each other

Agree a fee arrangement before you delegate any work 

Most outsourcers charge hourly and will want you to agree to a set number of hours per month. It’s important to discuss how flexibility they can be.  

For example, one AVN accountant has lots of March and December year ends and so April-June and Jan-Mar they need extra hours in order to get the work completed. In contrast, there will only be a small amount of work July-December. They have discussed this with their outsourcing company, planned the work, and agreed a total number of hours per year that can be used as they have planned.

In part two, Emma looks at how to systemise the outsourcing process so it works for everyone involved.

Watch Emma’s recent webinar: Outsourcing – How to plan, prepare and execute