Outsourced Bookkeeping in the UK: Scope and Size
Unlock the potential of outsourcing bookkeeping services! Explore the advantages and latest trends in the UK market. Our in-depth guide highlights the rise of outsourced solutions, helping businesses gain efficiency, reduce costs, and stay competitive in today’s dynamic financial landscape.
Accounting and finance are huge industries in the UK. These industries have functioned typically for several years, but the global COVID-19 pandemic brought the world to a startling halt. It changed businesses’ operations and gave the conventional accounting industry a reality check.
In the current scenario, it has become imperative for accountancy practices to focus on expanding their portfolio and adding value-based services to survive the growing competition. One of the easiest and most cost-effective ways of doing this is to outsource accounting and its core functions.
Bookkeeping is an essential component of accounting. It helps document a company’s financial transactions, which may be useful during an audit or report preparation. However, it is also a cumbersome task that takes up most accountants’ time and prevents them from focusing on additional services. Therefore, several practices now consider outsourced bookkeeping a plausible solution to their staffing and scalability woes.
There has been a notable rise in practices of outsourcing tedious compliance tasks such as bookkeeping to reliable outsourcing providers. According to a 2019 ForrestBrown survey on accounting outsourcing, nearly 64% of accountancy firms in the UK expect to outsource their core services. This number is estimated to grow in the post-pandemic world.
THE DEMAND AND SUPPLY GAP FOR SKILLED BOOKKEEPERS
Accountancy practices need no introduction to the talent shortage. Over the years, these firms have struggled to hire skilled accountants and bookkeepers with up-to-date knowledge of the industry and good technical skills.
However, staffing issues took a new shape after the global pandemic, eventually culminating in The Great Resignation. Research suggests that almost one-third of UK workers are considering moving to a new job in 2022. Moreover, new-generation accountants prioritize their health, well-being, and career development over simply doing monotonous jobs.
With accountants moving to work with large accounting firms, small and mid-sized practices need help to recruit and retain talented resources. Short-staffed, these firms find it difficult to broaden their scope as most of their resources are occupied with core compliance tasks such as bookkeeping.
Dealing with staffing challenges while keeping operational costs in check is challenging. Outsourcing bookkeeping services is an easy and surefire way to deal with this. Top bookkeeping outsourcing companies employ highly skilled bookkeepers and train them extensively on UK accounting norms. Thus, these companies can effortlessly end your firm’s demand and supply gap.
Outsourced bookkeeping professionals are based offshore and work out of a delivery center. These experts are trained extensively to adapt to diverse work cultures and manage complex bookkeeping functions. They can work as a seamless extension of your time and help your firm grow effectively.
BATTLING SCALABILITY ISSUES WITH OUTSOURCED BOOKKEEPING
Each year, the competition in the global business world grows severely. Accountants with small and mid-sized practices constantly need help to beat large firms and scale their practices. Additionally, the growing staffing issues have further slowed small practices’ efforts to attract new clients and retain the existing ones.
Adding new services, however, is a highly time and resource-intensive process. Since accounting firms struggle on both fronts, outsourced bookkeeping services can be a viable solution.
Outsourcing your bookkeeping function helps free up your in-house team and thus generates capacity. Your team can then focus on value-based services such as advisory and legal, which clients demand.
Value-based services can earn good profits for an accountancy firm. Further, adding new clients guarantees a steady flow of income throughout the year. Thus, outsourced bookkeeping can help practices cut unnecessary costs, build capacity, earn profits, and scale effectively.
Benefits of Outsourcing Bookkeeping
You may have considered having an in-house bookkeeper or outsourcing your accounting work as a business owner. Think of a day when you do not have to do any bookkeeping. You could use your time better, focusing on your business growth.
Bookkeeping is a necessary process for accounting firms. It records your business’s financial transactions into organized accounts daily. However, it is tiresome and time-consuming, making it difficult to handle in-house. So, it is better to assign the bookkeeping tasks to a third-party provider.
What are the Benefits of Outsourcing Bookkeeping?
The practice of outsourcing promotes cost savings along with facilitating expansion. It works well for small business owners who need help to afford in-house bookkeeping. Let’s take a look at the benefits outsourcing bookkeeping offers:
Saves Operating Costs
Hiring an employee involves more costs than just payroll services. The other expenses include insurance, training, benefits, and recruiting. Someone in your business will have to devote time to training a bookkeeper. You will need a person to cover sick leave and public holidays for the bookkeeper. When total personnel costs are calculated, outsourcing bookkeeping is a cost-saving option.
Instead of allocating funds towards bookkeeping, you can spend it on essential employees. For instance, hire more mechanics if you own a car maintenance shop. This will decrease wait time and improve productivity.
Save Time and Reduces Paperwork
Managing and reconciling financial records takes considerable time in your day. Loads of physical paperwork are time-consuming. A benefit of outsourcing bookkeeping is that you save much time at a much lower cost.
When burdensome work of bookkeeping is outsourced, you can focus on aspects that require your attention. You will have more time to improve customer service, monitor processes, and improve overall operations.
Access a Cloud-Based Bookkeeping System
Prominent outsourcing companies work on a completely online interface. It helps them to streamline processes and manage the work effectively.
Since it is based in the cloud, you and your bookkeeping company can assess records at any time. This collaboration means the company can instantly input your income and monthly expenses. It gives you a clear view of your finances and new transactions.
Errors in accounting or bookkeeping services can have several causes. An inexperienced bookkeeper is more vulnerable to making mistakes. Even if you hire an experienced in-house bookkeeper, you accept them to make some errors in their initial period. Before the numbers are error-free, bookkeepers need a specific period.
You will already have a team with much-needed expertise when you outsource your bookkeeping work. The team will use automated bookkeeping software to track your finances and use their knowledge to resolve any issues.
Get Detailed Financial Reporting
A primary benefit of outsourcing bookkeeping is the detailed financial insights that come along with it. You can review your balance sheets, cash flow, and incurred profits and losses. You can assess your clients’ financial data with a click for better-informed decisions.
Bookkeepers have an organized way of recording information. Therefore, extracting information from the report is easy. This information can be shared with stakeholders, employees, and financial advisors. Insights like this are essential at any given stage of your business.
Helps in Tax Seasons
Several companies need help getting all their records intact for tax preparation. Even others with an accounting system often find it does not follow tax rules.
Outsourced bookkeeping companies have tax experts on staff who ensure your processes are tax-compliant. These companies guarantee to complete the bookkeeping tasks before the tax season arrives. Experts will help you to file tax returns conveniently and accurately.
Remove Unneeded Services
Companies have different accounting requirements at different stages. They can add, remove, or alter their services when needed. As these companies change over time, analyzing which bookkeeping staff is required may be challenging.
Outsourcing bookkeeping makes it easy for you to add or remove services that are not needed. When your company expands, you can choose to add new services or discontinue services that are not required.
What are the things to look for before outsourcing bookkeeping?
Outsourcing accounting and bookkeeping services to a reputable company is your best decision. However, it would help if you considered a few things to ensure that your outsourcing firm is the best fit for your business:
Evaluate the Expertise of the Business Company
It would help if you verified that the company possesses the required level of experience it claims. Examine the portfolios of past clients and check team composition for better evaluation.
These steps will assist you in getting a better picture of the outsourcing firm’s proficiency. It would help if you chose a firm where Certified Public Accountants (CPAs) administer the workforce.
The Bottom Line
Outsourcing your Bookkeeping Services streamlines your business operations. It helps you to reduce costs, save time, and scale your business. Having financial insight will have a positive impact on your business growth.