Outsourced Accountant Vs. In-House Accountant

Possibly you have heard that it is cost-effective to hire an outsourced accountant but you are still in doubt about whether it is actually cost-effective or not. In-house and outsourced services offer different workflows when managing the bookkeeping and accounting for your company. While we understand that outsourced bookkeeping and accounting is not right for every business, if it does fit your business’s needs, it can often cost less and provide more expertise than a traditional in-house accounting department

The table below attempts to show you some of the areas where it can be more beneficial to engage an outsourced accountant than an in-house accountant. From the table, you will agree with me that overhead costs incurred on hiring an in-house accountant add an additional 30% on top of an employee’s base salary.

 

	In-house Accountant	Outsourced Accountant
Management time	Extensive monitoring time	Monitoring cost is minimized
Quality	If you don’t hire a competent and well-experienced accountant (which is usually very demanding and costly), reports and other critical financial information may be inaccurate and incomplete, which impacts business decisions.	An outsourced accountant is well-grounded and exposed to the different accounting systems of various organizations. He also works in a team. This impacts the quality of his works.
Software	The company needs to buy accounting software for the accountant to use.	You don’t need to buy accounting software. Outsourced accounting firms have software they use to keep their clients’ accounting records
Growth	Hard to catch up with the pace of fast expansion	Standard policies and procedures to support the rapid growth of business
Costs	HR costs are high, some of the costs that should be taken into account include: Recruitment fees (advertising, agency) The opportunity cost of time spent interviewing potential new candidates Training Cost of a desk (provision of a table, computer, rent, software, administration, stationery, etc) Redundancy payments Temp staff while the employee is on leave Subscriptions specific to employees Social welfare and pension for employees Medical costs	Only payment of service fee
Risk	Relatively high fraud and non-compliance risk especially when the company cannot afford to employ enough hands that will ensure the division of duties. When you have just one or two employees handling your books, your company has a higher risk of fraud. The person paying the bills might be the one reconciling the bank account, and because there isn’t a separation of duties, you have just given them the keys to the bank.  They can steal from you and cover their tracks. And you won’t find out until it’s too late.	Low fraud risk and compliance with statutory requirements are achieved. Outsourcing helps reduce the risk of fraud associated with your business’s accounting because there are separation of duties and more rigorous steps taken when providing financial statements for the business.