Outsourced Bookkeeping with Dedicated Engagement Models

Bookkeeping outsourcing has seen a massive rise in demand in the UK accounting world. Post the global Covid-19 pandemic, accounting firms have shifted focus to outsourced bookkeeping services to rid their existing staff of time-intensive compliance tasks and shift focus to value-based services. Outsourcing is thus estimated to be the future of bookkeeping for accounting firms in the coming years.

While many accounting practices have already been outsourcing some of their services, others still stand unaware of its elaborate details. Bookkeeping outsourcing has numerous benefits for accounting firms, especially for growth-driven small and mid-sized practices. However, accountants often encounter the real question: How much does it cost to outsource bookkeeping services.

The cost of bookkeeping outsourcing depends on several factors, such as the reputation and experience of the outsourcing company, the number of resources required, and the outsourcing engagement model. The engagement model, in fact, largely determines the cost of outsourcing and the nature and process of the association.

This blog will explore the different engagement models for bookkeeping outsourcing in detail.

What is an outsourcing engagement model?

An engagement model in outsourcing is a framework that defines the association between a client and the outsourcing provider. In the case of outsourced bookkeeping services, the engagement model determines the roles and responsibilities of each firm and specifies the level of control they can levy.

An engagement model also defines the tenure of outsourcing and its process. It largely impacts the final pricing of outsourcing and is often tailored to best suit clients’ needs.

Different outsourced bookkeeping firms provide varied engagement models. Let’s look at some of the most preferred models by accountants and accounting firms.

1. Full-Time Employee (FTE) model

The Full-Time Employee engagement model is the most effective and widely preferred model for bookkeeping outsourcing in the UK. As the name suggests, this model provides a full-time employee (in this case, a bookkeeper) to an accounting firm.

The FTE model is exclusively designed for accounting firms with several clients and consistent workflows. It is also ideal for progressive practices looking to add new clients to their existing base.

When an accounting practice chooses to outsource bookkeeping services with the FTE model, the outsourcing firm typically charges them monthly based on the number of resources hired.

Advantages of the FTE Model

Dedicated resources and better coordination
More control and better management of tasks
Complete transparency and accountability of work
More economical than hourly rates for high volumes of work
Increased profitability and capacity to scale

Disadvantages of the FTE Model

Requires a vast managerial experience on the part of accountants
Practices are required to have a standardised bookkeeping process
A major change in requirements can disrupt staffing

In addition to the FTE engagement model, top outsourced bookkeeping companies also provide a Managed FTE solution. This solution facilitates a superior outsourcing experience and provides added benefits over the FTE model.

Some of these include:

Dedicated Account Manager as an immediate point of contact
Better communication and resolution of queries
End-to-end onshore support

2. Ad-hoc Model

The second most popular engagement model for outsourced bookkeeping services is the Ad-hoc model. As the name suggests, this model provides practices with a skilled bookkeeper on an ad-hoc basis as and when a requirement arises.

The ad-hoc model is ideal for smaller accountancy practices that do not have many clients or consistent workflows throughout the year. These firms usually face a talent crunch only during the peak season and seek to outsource for a limited period.

When accounting practices outsource bookkeeping services with the ad-hoc engagement model, the outsourcing firm typically charges them hourly against the resources’ time.

Advantages of the Ad-hoc Model

Effective management of peak season staffing woes
Timely achievement of deadlines
Complete transparency and accountability of work
Highly cost-effective for lower volumes of work
Increased profitability and capacity to scale

Disadvantages of the Ad-hoc Model

Practices may have to work with a different resource each time they outsource
Not suitable for longer durations of outsourcing
Additional support such as the Managed solution does not apply

3. Block of Hours Model

The Block of Hours engagement model for outsourced bookkeeping is similar to the Ad-hoc model. However, unlike the Ad-hoc model, accounting firms opting for this solution pre-determine the number of hours they would need an outsourced resource.

This engagement model is ideal for accounting practices taking up specialised projects on an ad-hoc basis. Accountancy firms pre-estimate the total work hours for a particular project and outsource their needs only for the said period. As hours are delivered, the outsourcing firm deducts them from the total hours purchased by the accountancy practice.

The Block of Hours model is popular among small and medium-sized accounting firms that cannot determine the exact scope of work. These companies outsource bookkeeping services on periodically instead of going for the ad-hoc model.

Advantages of the Block of Hours Model

The Block of Hours model offers similar advantages as the ad-hoc model.

Efficient project management and completion of deadlines
Highly cost-effective for project-based tasks
Complete transparency and accountability of work
Increased profitability and capacity to scale

Disadvantages of the Block of Hours Model

A change in requirement can disrupt staffing
Not suitable for practices with undefined workflows
Accountants may need to work with different resources every time they outsource

So, Which Engagement Model is Right for You?

There is no one-size-fits-all rule to choosing the suitable engagement model for your outsourced bookkeeping needs. Accountants must weigh their needs carefully and consult with outsourcing experts to make the right decision. Leading bookkeeping outsourcing providers offer a free trial on their engagement models to help accountants gain practical insight into the outsourcing process and determine its productivity and profitability.

Must Read: An Accountant’s Guide to Outsourced Bookkeeping Services

Dedicated Outsourced Bookkeeping Services with QXAS

QXAS is a leading outsourced bookkeeping provider in the UK with 12+ years of experience and a massive team of over 1500+ accountants and bookkeepers. Our resources are highly skilled and extensively trained to handle your end-to-end bookkeeping needs and improve your firm’s capacity to scale.

We provide dedicated engagement models and specialise in the Managed Full-Time Employee (MFTE) solution and provide dedicated services to clients. Our offshore bookkeepers are highly employable and can be hired in as low as 48 hours.

To know more about our services, call us on +44 208 146 0808 or log on to Outsourced Accounting, Bookkeeping, and Payroll Services | QXAS UK (qxaccounting.com).

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Pooja Kshirsagar

With a rich experience of curating content for various industries, Pooja believes in the power of words in marketing and building brands. She enjoys experimenting with different forms of content and is currently on a mission to add value to the accounting industry through her detailed and researched write-ups.

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Originally published Jun 17, 2022 03:06:29, updated Jul 07 2022

Topics: Benefits of Outsourcing, bookkeeping, outsourced bookkeeping services, Outsourcing, Outsourcing Services