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Outsourcing as a Tool to Maximize Accounting Firm Profitability

Outsourcing is a term which has been catching on during the last five years. Although its definition is difficult to find in a standard dictionary, for those of us who consult with CPA firms, it’s a familiar term and offers an extremely effective way to cut the costs of delivering services while maintaining, if not improving, the quality of those services.

Just what is “outsourcing”? Outsourcing is the use of an outside professional or professional organization to perform a project or a series of related tasks for a specific period of time.


Contract assistance is available for specific projects or regular tasks such as general ledger maintenance, invoicing, accounts payable and/or receivable maintenance and other related functions. By outsourcing any or all of these functions, the need for accounting employees can be reduced or eliminated.

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Accounting firms are accustomed to Bookkeeping, Accounting and other support functions like payroll processing, accounts payable processing and Financial Statements. Outsourcing builds on that concept but does not require day-to-day management and direction from an on-site supervisor or manager. When a function is outsourced, the individual has total responsibility for the project or work and has the ability to take it from beginning to end with minimal, if any, direction.

Most of us are familiar with the typical functions which have been outsourced in the past, such as: Quarterly payroll reporting, year-end tax returns; annual financial statements and audits. Today, outsourcing functions have expanded into many other areas.

This trend will continue for several reasons:

Client service demands that we exceed, not just meet, client expectations. How can we be an expert and 100% focused on everything?

The annual cost of an employee today is enormous when you consider the total compensation package; the risk and the downside can be equally as great.

Employers fear the ramifications of hiring the wrong person. How do I fire the individual if they don’t work out? What happens if I get sued?

Advertising, interviewing, hiring and training are extremely time consuming. How do I find time to do those tasks and meet my clients’ needs at the same time?

Often times we don’t know all of the facets of a particular job – so how can we teach someone how to do it?

Law practice continues to become more and more specialized – is our time better spent focused on our specialty?
Even for those Accounting firms that are large enough to have a human resources professional, the “people game” has become a tricky one. We all know employee loyalty is at an all time low. In times gone by, it was customary for a departing employee to provide an employer with two weeks notice when the employee was resigning from a position. Sometimes this happens today and sometimes it doesn’t. And, even if an employee gives two weeks notice, it is not enough time to replace that individual and have them provide some training to the new employee to ensure a smooth transition. Did you know the average time to hire a new employee is one month and depending on the complexity of the position, it is generally six months before the new employee is fully functional? When you outsource, you relieve yourself of these problems because the person is not your employee.

Human Resources and Legal Staff

Similarly, accounting firms often have trouble supporting or adequately staffing their human resources function. This often results in less than perfect employee relations, quality problems, and possible exposure to liability.

It is no secret that the opportunities for partnerships are shrinking and that the demands of making partner are increasing exponentially. Similarly, lawyer dissatisfaction continues to rise; many accountants long for fewer billable and marketing hours and more family time.

How do you know when it makes sense to outsource or hire a temporary rather than hire your own employee? Here are some questions to ponder. . .

Do you have a task or assignment of a specific duration?

Do you have a specific group of tasks (such as some accounting functions) which, if they would be done by an outside party, rather than your employee, would relieve you of administrative tasks and thus free-up your time for client matters?

Based on a specific group of tasks, do you feel you need to hire a new employee, but are uncertain of the actual job description at this time? Would it be helpful to develop the job description with a person who has inside knowledge of what the task or series of tasks will entail?

Are you tired of dealing with management issues which interfere with your client work?
If you answered “yes” to any of the above questions, your firm could be a candidate for outsourcing or, at a minimum, temporary staffing. While outsourcing is not the answer for every job in an accounting firm, it is increasingly becoming an alternative.

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