Mid-sized accounting firms often find themselves at a critical juncture. They strive to grow but are faced with many challenges. This is especially true in the bookkeeping aspect of business. Just like for firms of other sizes, bookkeeping is the foundation of successful accounting. However, managing increasing client size, handling the complex needs of clients and the government in the form of regulation, and staying updated with the ever-changing financial regulations create several pains for mid-size firms. As the pains grow in size and number, it slows their overall growth, diverts resources and causes inefficiencies in the core business.
For mid-size firms, finding the ground between meeting the operational demands, while maintaining efficiency, can be difficult. They do not have the infrastructure of a large firm, but their goals extend to growing their client base. To address the volume, sometimes quality is compromised.
To grow properly, the teams need additional bookkeeping staff, which comes with high overhead costs, extensive training, and chances of inconsistent quality. Often, firms are forced to hire junior accountants or bookkeepers who may lack the expertise required to handle complex tasks, leading to mistakes, rework and client dissatisfaction.
An in-house bookkeeping team requires a significant amount of resources. From recruitment and onboarding to training and salaries, it is a costly affair. Additionally, mid-sized firms may have tighter margins than their larger counterparts. This overhead pressure makes it harder for firms to invest in strategic growth initiatives like technology upgrades or expanding advisory services, which could bring higher returns.
3. Retention and talent shortage
The Wall Street Journal reported in 2023 that about 3 billion accountants have quit the industry since 2020 with no intention of ever coming back. This, added with boomers retiring and more and more accountants choosing a different career path, is a major concern for firm leaders. Retaining skilled bookkeepers and attracting experts are a constant challenge for mid-size firms. Even if they manage to find good talent, they lose it to the constant poaching of candidates. This disrupts the operations, causing delays in project deliveries and most importantly, reduced client satisfaction.
4. Technology and compliance challenges
As bookkeeping becomes more reliant on the new-age tools and technology, mid-size firms find themselves falling behind. The financial investment and the constant need to upskill are the two key factors that cause an obstruction. As technology evolves, clients expect the firms to adopt advanced solutions that allow them to get real-time data, automated reconciliations, and seamless reporting, for example.
Another key challenge that accounting firms face is the need to stay compliant with both local and international regulations. These are constantly evolving and an in-house team with limited experience and resources may find it hard to keep up. Compliance mistakes can be costly, leading to penalties and reputational damage.
5. Loss of focus on core activities
Bookkeeping is a time-consuming task. The more time and energy mid-size accounting firm leaders spend on transactional tasks, the less time they can allocate to high-value activities such as advisory services that are key in revenue generation. Bookkeeping may also require more oversight when the processes aren’t streamlined. This may lead to senior members and firm leaders reviewing routine bookkeeping work rather than focusing on business growth and client advisory.
1. Efficiently scaling with outsourced teams
When firm leaders seek the support of outsourcing bookkeeping, they can scale operations without taking on the load of additional full-time employees. This model provides flexibility, and on-demand access to skilled and expert professionals who can perform complex financial functions. The outsourced teams allow firms to scale up and down as per the needs of the firms by providing cost-effective solutions during peak periods like tax season. This also helps avoid unnecessary expenses, while preventing the overburdening of teams.
2. Cost-effective operations and improved margins
Mid-size accounting firms can help firms reduce their overhead costs. Instead of managing an in-house team, firms can choose flexible pricing such as an hourly rate or pay per project. This eliminates the need to invest in bookkeeping technology, software licenses and IT infrastructure. The right offshoring partner also helps firms gain control over their costs and improve profitability. The reduction of costs enables firms to invest in more profitable areas of business.
3. Access to a global talent pool
When you outsource your accounting practice, you get access to a global pool of talent. They not only help address the talent shortage problem, but release the firms from the constant pressure of hiring and training them. With bookkeeping services being handled by experts, mid-size firms can ensure accuracy, consistency, and timely delivery for their clients. Many outsourcing firms also have dedicated teams who work exclusively for a single client. These dedicated teams provide continuous service delivery, allowing firms to get a team just like their in-house teams.
4. Leverage technology without major investment
Outsourcing firms are constantly working towards making themselves advanced. They invest heavily in technology and accounting tools as a part of their offering. By outsourcing, mid-sized accounting firms can use the latest accounting software without the need for a significant capital outlay. Outsourcing firms are often well-aware of the regulatory compliance too. They can help mid-size firms working in different jurisdictions ensure that the firms remain compliant with minimal penalties or errors. The outsourcing provider takes responsibility for keeping up with the changes in compliance and technology.
Mid-size firms can shift their focus on high-value activities when they outsource the regular tasks to an outsourcing firm. These tasks include tax planning, financial advisory, client servicing and business consulting. Outsourcing also provides accounting firms with the peace of mind as these tasks can now be handled efficiently, without the leaders having to constantly oversee the progress. It allows the senior members of the firms to focus on tasks that help generate revenue and build long-term value.
If you have been overwhelmed by the time and efforts required to get your bookkeeping done, it’s time to hire a team of professionals. They can not only help offload tasks that prevent you from achieving your complete potential but also help keep stress at bay. Find your outsourcing partner today!
Sponsored Content: This article is generously brought to you by one of our valued sponsors. Their support enables us to continue delivering expert insights and the latest industry trends to our dedicated community of accounting professionals.