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QX An Accountant’s Guide to Outsourced Bookkeeping Services

An Accountant’s Guide to Outsourced Bookkeeping Services

Accounting is a traditional job. While many other global industries have undergone technological and digital revolutions, accounting has mostly remained conventional.

Accounting involves several compliance tasks such as bookkeeping that are often tedious and time intensive. Although accountants have resorted to using the latest software to manage these tasks better, the involvement of manual effort has not ceased.

Bookkeeping is the process of recording and maintaining a company’s financial transactions. It is an essential but highly tedious task that takes up a lot of accountants’ time. To manage this job better, it is a good idea for accountants to outsource bookkeeping services to a reliable outsourcing partner.

Bookkeeping outsourcing is the practice of handing over an accounting firm’s bookkeeping needs to third-party offshore professionals who are skilled in the task. Bookkeeping outsourcing firms give accountants exclusive access to highly trained offshore experts who can efficiently manage your clients’ end-to-end bookkeeping needs.

Outsourced bookkeeping is an effective solution for small-scale accounting firms to ensure significant cost savings, acquire new clients, sustain the growing competition, and improve their firm’s capacity to scale.

 

Bookkeeping Outsourcing in the UK: Scope and Size

Accounting firms in the UK have been struggling with a massive skills shortage over the last few years. With the onset of the Great Resignation in the post-pandemic world, this problem has only gotten worse.

Accountants are often occupied with tedious compliance tasks and cannot focus on additional value-based services. Therefore, most accounting practices in the UK are now looking for solutions to free up their resources, facilitate cost savings, and enhance productivity.

One of the surefire ways for small practices to grow while keeping costs in check is to outsource bookkeeping services. Bookkeeping is a core function of accounting and cannot be avoided. However, outsourcing it to experienced professionals can help firms to direct their resources to more productive tasks and improve efficiency at the same time.

Accounting is a vast industry in the UK, offering practices a vast scope to grow and succeed. However, small practices are often short-staffed and find it difficult to retain talented resources. Outsourced bookkeeping helps these practices hire offshore experts quickly and easily, thus facilitating efficiency.

According to ForrestBrown’s Trends in Outsourcing for 2020 report, bookkeeping is among the most widely outsourced functions by accounting firms, constituting a 33% of the total response.

outsourcing-trends-for-accounting-firms

There is a pool of bookkeeping outsourcing providers in the UK. Accountants must understand the nuances of the service and choose the right outsourcing partner to make bookkeeping a profitable service for their practice.

Read more: Outsourced Bookkeeping in the UK: Scope and Size (qxaccounting.com)

The Step-by-Step Process to Outsourcing Bookkeeping

Outsourcing bookkeeping can be a profitable decision for practices, but the process leading up to it may not be as simple. There are multiple steps to choosing the right outsourcing partner and numerous factors that accountants must consider before onboarding outsourced resources to their team.

Here is a step-by-step guide for accountants to outsource bookkeeping services to a dependable provider.

outsourced-bookkeeping-process

Gauge the scope of outsourcing for your firm

Different firms have different needs and capabilities. Your practice may be battling staffing shortages or struggling to maintain complete efficiency in bookkeeping services. But is your firm ready to outsource yet? This is an important question accountants must ask themselves to determine if it is the right time to outsource bookkeeping services.

Perform an internal process and capacity audit

Your firm’s existing processes and infrastructure and your team’s ability to manage workload affect your outsourcing decision. Perform a thorough audit to understand your firm’s standing before you decide to outsource your bookkeeping needs.

Research the best outsourcing providers in the market

As stated above, there are numerous outsourced bookkeeping providers in the market. To choose the right partner for their firm, accountants must research multiple outsourcing providers. Consider their industry experience, awards and certifications, compliances, and technological expertise and compare them mutually to ascertain the right one.

Conduct interviews and background checks

Research alone is not enough to determine the right outsourcing partner for your practice. Conduct detailed interviews with the outsourcing providers’ representatives. Speak to their past and present clients and follow them on social media. This will give accountants a practical insight into the firm’s experience and credibility.

Finalise the budget and sign the contract

The next step in the process is to finalise the outsourced bookkeeping budget and the terms of the contract. Ensure you get it in writing from the outsourcing firm and read the agreement carefully before signing it.

Prepare to onboard offshore experts to your team

After the contract has been signed, it is time to prepare to onboard the outsourced offshore professionals to your team. Speak to your internal team and train them to coordinate and work with the outsourced professionals. Interact with your offshore team regularly and provide honest feedback about their work to help them improve their services.

Read more: The Step-by-Step Guide to Outsource Bookkeeping Services

Benefits of Outsourced Bookkeeping Services

Outsourcing bookkeeping is critical to accounting firms’ success, especially small practices. When done the right way and with the right outsourcing partner, they have multiple benefits to offer.

The Trends in Outsourcing 2020 report by ForrestBrown clearly indicates the benefit of outsourced bookkeeping for accountancy practices, with as many as 73% of the respondents confirming that it positively impacted their business.

impact-of-outsourced-bookkeeping

Here are some of the proven pros of outsourced bookkeeping services for accountancy practices.

Decreased staffing shortages

Staffing shortages can be frustrating and leave accountants limited time to focus on value-based business tasks. Top bookkeeping outsourcing firms provide practices with highly trained experts who can work as an extension of their team. These professionals are not only skilled but also extensively trained on global accounting standards.

Enhanced productivity

In the race to keep up with the growing competition and meet client deadlines, productivity often takes a backseat. Outsourced bookkeeping can be an effective solution for practices to maintain consistency in their work and enhance their productivity.

Significant cost savings

It is proven that outsourcing helps firms save big on unnecessary overhead costs such as hiring and training employees, paying employee benefits, building office infrastructure, etc. Moreover, working with offshore bookkeeping experts is highly cost-efficient compared to onshore hiring.

Also read: Outsourced Accounting vs. In-House Hiring: What You Should Know

Integration of the latest technology

Technology is key to the success of accounting practices in the post-pandemic world. Outsourced bookkeeping providers train their professionals on using the latest software, thus helping practices integrate the newest technology into their processes.

Higher capacity to scale

In today’s highly competitive world, it is challenging for small practices to scale effectively even while saving costs. Bookkeeping outsourcing can be a surefire solution for such firms to facilitate rapid growth and maximize profits.

To get the best out of outsourcing, accountants and accountancy practices must thoroughly understand its benefits and challenges before choosing to outsource bookkeeping services.

Read more: 5 Unparalleled Benefits of Outsourced Bookkeeping Services

Bookkeeping Outsourcing as a Solution to Staffing Shortages

Staffing woes need no introduction to accounting firms. Practices have suffered a global shortage of skilled accountants over the years. Moreover, it is challenging for small practices to retain talented accountants as they prefer to work with large firms.

Moreover, the GenZ are concerned about personal health and mental-wellbeing issues and opt to work with firms that offer them a good work-life balance. They also prioritize firms that provide fast growth and self-development opportunities.

staffing-challenges-for-accounting-firms

In the post-pandemic era, the challenges related to staffing have only gotten worse. Studies have shown that accountants willingly quit jobs without having a backup, thus paving the way for the Great Resignation. Finding skilled bookkeeping professionals is, thus, now more challenging than ever.

Therefore, many accountants and accountancy practices in the UK are looking to outsource bookkeeping services to India or other feasible countries to beat the ever-increasing staffing shortages. Bookkeeping outsourcing firms offer customised staffing solutions, wherein practices can hire the best offshore professionals to work with them.

Outsourced bookkeeping professionals are trained extensively on global accounting norms and the latest bookkeeping software. These professionals adapt well to diverse work cultures and can seamlessly work as an extension of a practice’s team, thus boosting your firm’s productivity.

Additionally, the outsourcing firm manages the end-to-end working and reporting of the offshore professionals to ensure seamless communication and transparency in their work. Accountants must, however, regularly connect with the outsourced bookkeeping professionals and provide them timely feedback to make the outsourcing association fruitful.

Read more: Deal with the UK Staff Shortages with Outsourced Bookkeeping

How Much Does It Cost to Outsource Bookkeeping?

There is no definitive answer to this question. The cost of outsourced bookkeeping services depends on several factors.

Accountants often make the mistake of choosing an outsourcing provider with the cheapest package. While this may go easy on your pocket, it may not earn you supreme quality resources and services.

Let’s look at the significant factors that affect the pricing of outsourced bookkeeping services.

Volume of work and number of resources

The cost of bookkeeping outsourcing primarily depends on the volume of work to be outsourced and the number of resources required by a practice. These factors also largely determine the firm’s suitable pricing and engagement models.

Market reputation of the outsourcing firm

This is one of the most critical factors that significantly affect bookkeeping outsourcing costs in the UK. Companies with a good reputation and vast industry experience charge higher for their services than their counterparts.

However, accountants and practices prefer to outsource bookkeeping services to reputed firms due to their resources’ quality and a seamless outsourcing experience.

Pricing and engagement models

Leading bookkeeping outsourcing providers in the UK offer varied pricing and engagement models tailored to the needs of accounting firms. These models are designed prudently to accommodate the diverse needs of practices and provide quality staffing solutions.

Accountants and accountancy practices must understand and consider each of the above factors to estimate the cost of outsourced bookkeeping. It is a good practice to get a pricing quote from multiple providers and compare them based on all the above factors to determine the best fit for your firm.

Selecting a Bookkeeping Outsourcing Provider

How many times have you contemplated outsourcing your bookkeeping needs but got lost in the process of finding the right provider for your firm?

Finding the right outsourcing partner that understands your firm’s needs can be exhausting. Here is a quick checklist to simplify the process for accountants and practices.

selecting-an-outsourced-bookkeeping-provider

Step 1: Research

Research is the most critical aspect of choosing an outsourced bookkeeping services provider for your firm. Consider multiple providers to begin with. Research their industry experience and reputation. Take into account the awards and certifications won by them. Gather as much data as you can and make a note of it.

Step 2: Interviews

The second step in the process is to conduct detailed interviews with each provider. Ask your potential outsourcing partner about their technical expertise and data security measures. Assess their communication systems and get an insight into their work culture.

Step 3: Comparison

The next step in the process is to analyse and compare each firm’s data to shortlist the right provider for your practice.

Step 4: Background check

Once your potential outsourced bookkeeping partner is shortlisted, it is time to conduct a detailed background check. Don’t just take a firm for their word. Read what their clients have to say about them. Ask for references and speak to them personally. Follow them on social media.

A background check is crucial in assessing an outsourcing provider’s experience and expertise, thus helping you make the right decision.

Read more: 7 Tips to Hire an Outsourced Bookkeeping Services Provider

Should Practices Outsource Bookkeeping Services to India?

In-house hiring is an expensive exercise. And so is onshore outsourcing.

in-house-vs-outsourced-bookkeeping

If the figures on Payscale are to be believed, the average salary of a full-time Senior Accountant in the UK is £34,633. Add to it the costs of training and development, employee benefits, and office infrastructure, and the final price elevates to about £49,000. On the other hand, an outsourced offshore counterpart will cost your firm between £21,000 to £24,000.

The above figures prove that hiring offshore professionals can be a cost-effective solution for accountancy firms, especially small practices.

Owing to the monetary benefit of hiring offshore professionals, many UK practices choose to outsource bookkeeping services to India. India is a popular outsourcing destination for global firms, providing practices with the best talent in the industry at highly competitive prices.

Indian accountants are known for their demonstrated industry knowledge and technical skills. Moreover, with extensive training, these professionals are made industry-ready by outsourcing firms and can work dedicatedly for your team.

By outsourcing your bookkeeping needs to India, you can avail talented resources that understand your clients’ bookkeeping requirements and work dedicatedly to improve your firm’s efficiency and productivity.

Bookkeeping Outsourcing Engagement Models

As discussed above, different outsourcing companies offer different engagement models for outsourced bookkeeping services. These models are designed keeping clients’ requirements and best interests at the fore.

The most preferred engagement models for bookkeeping outsourcing include the Full-time Employee (FTE) model and the Ad-hoc model. Let’s have a look at each of these models in detail.

ouotsourced-bookkeeping-engagement-models

Full-time Employee (FTE) Model

As the name suggests, the FTE model provides for a full-time offshore bookkeeping expert working exclusively for your firm. The outsourcing firm takes care of this resource’s end-to-end reporting and management. Based on the workload, practices may hire multiple resources or a dedicated FTE team.

The FTE model is exclusively crafted and highly recommended for practices with vast volumes of work, consistent workflows, or multiple clients. It is also a viable option for practices looking to add new services to their existing offerings or work with new clients.

In this model, the outsourced bookkeeping provider typically charges practices monthly against each resource.

Ad-hoc Model

The Ad-hoc model, as the name suggests, provides for a dedicated offshore bookkeeping expert on an ad-hoc basis as and when a practice requires one. The outsourcing firm manages the end-to-end reporting of this resource. Based on their workload, practices may hire multiple offshore resources on an ad-hoc basis.

The Ad-hoc model is designed for practices with low volumes of work, inconsistent workflows, and a limited number of clients. One of the major cons of this engagement model is that you may not get the same resource for your team every time you outsource, thus forcing you to work with a different expert every time. Plus, there is an added risk of getting a shared resource, which may ultimately affect productivity.

In this model, the outsourced bookkeeping services provider typically charges practices hourly against the resources’ time.

Each of the two engagement models has its pros and cons. Accountants must be mindful of their exact requirements and anticipate their upcoming workload to determine the suitable model for their firm.

Read more: Outsourced Bookkeeping with Dedicated Engagement Models

Dedicated Outsourced Bookkeeping Services with QXAS

QXAS is a top-tier global outsourcing company specialising in a range of services, including outsourced bookkeeping for accountants and accountancy practices. We understand modern-day staffing challenges and help practices beat them with our customised staffing solutions.

QXAS is the accounting outsourcing division of QX Global Group, one of the fast-growing accounting outsourcing companies in West India. We began our operations in 2003 as a mere 5-member startup and have grown into market leaders, thanks to our values and unbeaten passion.

With a rich experience of 12+ years in accounting, we have built a strong team of 1000+ accountants and bookkeepers who work dedicatedly for our clients. Their knowledge and industry expertise has helped make us one of the UK’s top outsourced bookkeeping services providers.

QXAS specialises in hiring talented accountants in India and training them extensively on the UK accounting and bookkeeping norms, thus making them industry ready. Our accountants are well-equipped to blend effortlessly with our clients’ work culture, adapt to their processes, and execute tasks with maximum efficiency.

QX thrives upon the core values of Quality and Excellence and is devoted to making outsourcing a seamless experience for global clients. Our commitment to excellence was reinstated in 2022 when QX earned a 100% score in all British Standards Institution (BSI) audits.

Why Choose QXAS?

  • Dedicated team of 1000+ accountants and bookkeepers
  • India’s first GDPR and ISO 27701 compliant accounting outsourcing company
  • Dedicated engagement models for client success and prosperity
  • Fully compliant with ISO 27001 for information security and ISO 9001 for quality
  • Professionally affiliated with prestigious organisations like ICAEW and ACCA
  • Leader in IAOP’s 2022 Global Outsourcing 100 List for eight consecutive years

To learn more about our services, call +44 208 146 0808, drop us an email at [email protected], or log on to Outsourced Accounting, Bookkeeping, and Payroll Services | QXAS UK (qxaccounting.com).