Snack 3: Outsourcing
Okay, so in the last post we talked about automation of some basic, and mundane tasks. Well…what about those difficult tasks that are still mundane (to the average business owner) or may be out of your field of interest or expertise? How do you decide if you should hire an employee to manage those tasks or if you could be better served by a company. While there are always drawbacks to outsourcing certain functions of a company and you should always get to know the people in the company that you are considering patronizing, outsourcing certain key business functions can really increase your bottom line.
Bookkeeping & Accounting Services
Take monthly bookkeeping & accounting, for example. You could pay a full time employee around $30,000.00 to manage monthly bookkeeping and accounting. Or you could pay a company a fraction of that (we are honestly talking less than $10,000.00 per year, in most cases) to manage your books. The key to successfully outsourcing this portion of your company is to understand your company’s accounting needs, and to work closely with your full service accounting firm to develop exactly what you are looking for, so that they can provide the service that you need. You also want to get to know the people at the firm you will be working with:
- How responsive are they?
- What is the quality of their work (ask around for references)?
- How frequently do they update your books?
- How will they track payroll in your books?
- What is the scope of their work (what is their specialty, do they offer advise, are they willing to do research, what is their level of understanding, etc)?
- Do they provide tax preparation services?
- What other work do they provide (do they offer financial analysis, tax planning, business consulting, etc)?
- Do they offer assistance with letters from taxing agencies? (there’s actually more than one that can send those nasty little letters)!
- What does their fee structure look like, and if they are flat rate, what is included in the flat rate?
- Are you comfortable with the people you will be working with, are they ethical and trust worthy?
This list can go on, but these ten items, are some of the most important things to consider when outsourcing something as sensitive and important as bookkeeping and accounting.
Technology Services
Another prime example is technology services. In some smaller companies, it is well worth not having a designated employee to handle those once every other month technology issues. If you can find the right person or company to be your technology ‘life line’ then you can save a substantial amount of money on technology services. The key: spend a little extra money upfront, and invest in the right technology for your company. This will save you the headache of the technology constantly being out of service, or out of service. This does not mean purchasing the most expensive or flashy technology on the market, but consulting a technology professional and doing an analysis of your company’s technology needs and purchasing what is right for your company, not necessarily what is least (or even most) expensive!
Imagine, trying to manage a busy grocery store by writing out pen and paper tickets. While this would save a lot on technology expenses, it would cost customers and negatively impact the company. At the same time, investing in the shopping carts that scan all items placed in them, may be an over investment! It all depends on your company’s needs. Hiring a technology consultant to help develop your technology systems will save you money in the long run. Here are a couple things to consider when outsourcing technology:
- Ask who will own the information (passwords, any created on the systems, etc.) – this will ensure that your intellectual property is not held hostage if you decide to change service providers.
- Ask for their SLP (or service promise), this will set your expectations on the type of service you can expect.
- Ask for a confidentiality agreement.
- Ask if there is staff training available.
- Have a detailed contract, so that you know exactly what you will be billed for.
- Ask for recommendations – it is important to look into the reputation of the people & company that you will be working with.
Always keep in mind that outsourcing technology can save you time & money, if done correctly. However, it can be a huge headache and cost both time and money if you select the wrong partner, so heavily vet any potential technology consultant or service provider.
Well, I’m out! Actually, speaking of that, we would be happy to be the one that you choose to outsource your monthly accounting to. Just give us a call (314-300-4699) or shoot us an email (staff@volpeconsulting-accounting.com) to start the conversation about how we can save you money!
Sincerely,
Chelsea Auton
The Volpe Consulting & Accounting Team
