How Much Does it Cost to Outsource Accounting Services?

Outsourcing is arguably one of the easiest ways for accountancy practices to scale quickly in times of uncertainty and add new services to their portfolios. It not only helps firms cut overhead costs significantly but also makes their daily workflows simpler and more efficient. To reap these benefits and create capacity for their practice, many accountants are turning to accounting outsourcing in the UK.

But one of the most asked questions by accountants is: ‘How much does it cost to outsource accounting’?

Outsourcing accounting services can cost approximately between £1,500 to £3,000 per month for the FTE Model based on the seniority and expertise of the resource.

In order to understand how accounting outsourcing companies price their services, it is important to comprehend the engagement models that determine the essential factors of the outsourcing association.

What is an Engagement Model in Outsourcing?

An engagement model is a strategic set of guidelines that define the association between an outsourcing provider and its client. It determines the roles and responsibilities of each firm, their obligations and commitments, and the duration of the association. These regulations and terms and conditions are systematically written down in an outsourcing contract, which both parties sign.

Engagement Models for Accounting Outsourcing

Each accountancy practice has diverse outsourcing requirements. Top accounting outsourcing companies, therefore, provide custom pricing to clients based on their exact needs. However, there are certain engagement models for UK accounting outsourcing that accountancy firms widely prefer. Let’s look at some of them.

In this blog, we will cover the following engagement models that QXAS offers:

• Managed Full-Time Employee (MFTE) Solution
• Onshore Support Solution
• Practice Outsourcing Solution

1. Managed Full-time Employee (FTE) Solution

The Managed Full-time Employee (MFTE) model is a proven, most effective engagement model for accountancy outsourcing. In this model, as the name suggests, the outsourcing company provides a dedicated employee and a dedicated manager or team leader to a practice at a fixed fee per month.

The pricing for the FTE model ranges approximately from £1,500/month to £2,000/month for an accountant/ senior accountant, based on the experience of the resource. For a more senior resource such as a manager, the pricing approximates from £2,500/month to £3,000/month. The fixed amount is billed to the accounting practice at the end of each month. Under this model, the outsourcing company scopes the number of hours to be completed within the monthly fee.

2. Onshore Support Solution

Outsourcing is mostly about offshoring. However, some practices prefer having an onshore manager for quick discussions, meetings, and resolution of queries. To cater to this requirement, many leading accounting outsourcing companies like QXAS offer the onshore support model.

The pricing for the onshore support model depends on accountancy firms’ particular requirements and can be deduced by requesting an outsourcing firm for a custom pricing quote.

2. Practice Outsourcing Solution

The Practice Outsourcing Solution is a more comprehensive model blending offshoring and onshoring to deliver a seamless outsourcing experience. In this model, the outsourcing company provides a dedicated individual working exclusively on your project along with complete client, admin, and technical support. In addition, you get specialised assistance on intricate accounting matters that can help you scale your practice effectively.

Here’s a quick summary of all the engagement models.

Wondering which model will best suit your firm? Let us help. Speak to our outsourcing expert today and let them guide you through the process.

FIND THE RIGHT MODEL FOR MY FIRM

The True Cost of Hiring Accountants In-House: 6 Points You Must Consider

One of the biggest indicators of a growing accountancy practice is the hiring of employees. But when you hire an employee, you have wages to pay every month. As you keep hiring more employees, you could easily make the mistake of thinking that monthly salaries are the only expenses you will bear. However, that is not the case.

1. Recruitment cost: Recruitment is a thriving industry in the UK. According to Business Advice, most recruitment agencies usually charge between 20-30 percent of the final salary. So if we assume Payscale is correct, and you pay £34,781 to your senior accountant, the recruitment cost would be above £7,000.

2. Training cost: New employees need to be trained before they can start processing tasks. Either you or someone else will have to take time away from revenue-earning activities to do this. Instead, you could use that time to bring in new clients or work on existing work. However, when you outsource, accounting outsourcing companies ensure that your outsourced workers are up to speed on any accounting tasks you throw at them.

3. Office space and equipment: When you hire an employee in-house, you have the bear the costs of onboarding, furniture, workstation, office space, parking spaces, and other equipment. The cost per annum could easily go up to £6,000 per annum.

4. Time cost: One of the issues accountants fail to take account of is the productive time of an in-house accountant. There are 253 working days in a year; however, if you consider holidays (28 days – including bank holidays), sickness, meetings, appraisals, and training, it is unlikely that your in-house accountant works for more than 225 days in a year.

5. Management costs: The final cost is the cost of managing and developing your in-house accountants. This includes yearly appraisals, meetings to discuss career opportunities, and providing feedback on progress. It is likely to take three management days across the year, maybe more if issues arise. These costs can easily be avoided with accountancy outsourcing.

6. Other employer costs: Some of the most obvious employer expenses you could be responsible for include Employer National Insurance contributions (approximately £1,500 for an inhouse accountant), auto-enrolment pension contributions, employers’ liability insurance, holiday pay, sick pay, maternity pay, cost of coffee and toilet paper, phone bills, electricity bills, and a drink or two every now and then.

The chart below is just an example of how accounting outsourcing services can reduce your labour costs which are reflected as overall savings for your practice. How much of a difference can all these savings add up to?

Note: The above figures are approximate, taken from multiple references. The actual figures may differ depending on numerous factors. The cost of hiring a QX Accountant, too, varies based on the seniority and experience of the resource.

 

Is Accounting Outsourcing Right for Your Firm?

By outsourcing accounting services, you can minimise and even eliminate most of the employee-related costs mentioned above. Reducing these costs allows you to not only save money but also generate the capacity and time to grow your practice.

Accounting, as a profession, has undergone massive changes over the years. Driving technological advancements and integrating automation in many of its processes, the profession has become more sophisticated and organised than ever.

However, the positive transformation has constantly been accompanied by numerous challenges. The Great Resignation, coupled with the impending effects of the global coronavirus pandemic, has put immense pressure on practices, forcing them to take the outsourcing route. Accounting outsourcing services are therefore here to stay and grow in the coming years.

Here’s your complete guide to accounting outsourcing in the UK in 2022.

Free Accounting Outsourcing Trial with QXAS

All businesses are looking for a way to maximise their returns. This can be accomplished by a number of methods and outsourcing is definitely one of them. If you are considering outsourcing and are unsure if it’s right for you, why not get in touch with us for a free trial?

QXAS is a leading accounting outsourcing service provider with operations in several countries, including the UK. With a rich outsourcing experience and a proven track record, QXAS is a one-stop destination for accountants and accountancy practices to outsource their accounting services. Our team of 1500+ accountants is highly skilled and experienced in end-to-end accounting functions and can work seamlessly based on clients’ requirements. With QXAS, you can quickly and effectively scale your business without incurring additional and unreasonable costs.

Book your free trial today by clicking here or call +44 208-146-0808 to speak to our outsourcing advisor. To explore our services in more detail, log on to Outsourced Accounting, Bookkeeping, and Payroll Services | QXAS UK (qxaccounting.com).