Find out why there’s a better option than outsourcing your bookkeeping.
Bookkeeping frequently bottlenecks firms’ productivity, resources, and growth, so many accounting firms outsource this function to save money. Outsourcing bookkeeping has many pros and cons, and before you throw yourself on the outsourcing bandwagon, let’s consider some hidden costs you might not know about:
The Hidden Costs of Outsourcing Bookkeeping
When considering outsourcing your bookkeeping, you must recognize that costs and your staff skillset might not be set in stone. Several factors can change these variables, making adaptability, resilience, and a keen appreciation of Ethiopian Jazz — that’s a personal one for us — key features of any accounting firm that wants to thrive. Here’s why:
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Business Growth and Seasonal Shifts: As your business grows, bookkeeping needs can change, affecting how much you pay for it if it’s outsourced. Embrace growth, but be prepared for your bookkeeping needs to evolve alongside your business, especially during busy seasons like tax season (you don’t want to mess with the IRS).
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Different Tasks, Different Costs: Not all bookkeeping tasks are created equal — hell, what is bookkeeping anymore? From routine data entry to complex financial analysis and advisory services, your range of workload can vary greatly, as well as the associated outsourcing costs that come with it.
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A Third Party Can Ruin Your Party: Having a diverse set of providers can be detrimental to your bookkeeping, as information, security, and geographic and socioeconomic factors can affect your accounting firm’s capacity and ability to provide a reliable service.
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Communication Problems: An outsourced bookkeeping team could be cost-efficient and highly responsible, but not every team is familiar with how you operate your business or what industry you are in — or even your timezone — making it difficult to communicate your needs and wants.
Knowing these factors can help you handle the costs better and understand why outsourced bookkeeping — even with its fair amount of benefits — might not be the best solution for your accounting firm.
![is-outsourced-bookkeeping-really-saving-you-money-The-Hidden-Costs-of-Outsourcing-Bookkeeping](https://www.botkeeper.com/hubfs/creative-and-content/blogs/2024/7-18-24/is-outsourced-bookkeeping-really-saving-you-money-The-Hidden-Costs-of-Outsourcing-Bookkeeping.jpg)
Enter the Outsourcing Boxing Ring: The Fixed vs. Variable Models
If you decide to outsource your bookkeeping, your pricing, costs, and margins can vary, with fixed and variable cost models as part of the deal, but not without its pros and cons — like a good boxing match. Here are some considerations on fixed vs. variable models’ benefits and drawbacks to keep in mind:
Fixed Costs: He’s Not Human
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No Surprises: With fixed costs, your monthly budget for outsourcing bookkeeping stays the same — easy to plan, and no guesswork needed.
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Ease of Onboarding: Fixed prices allow you to grow your outsourced bookkeeping without complicated cost changes and renegotiations.
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Predictability when expanding: As you add clients, (or bookkeeping services for current clients not using them). You can easily calculate your own expenses and determine the margin you want or need to make.
Variable Costs: Gonna Fly Now
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Better Client Opportunities: Variable costs change, most often based on availability, time of year, or number/complexity of clients. However, if your pricing strategy doesn’t match, this could be a problem, as variable costs can explode from one moment to another. Over time, these can average out. But they don’t always.
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Optimize Your Resources: You’ll spend money that corresponds to the actual work. It’s fair and straightforward, and ensures optimal resource allocation. However, most outsourced bookkeeping companies have fixed rates, which can render your resources inflexible.
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Heads Up for Busy Times: When work picks up or gets tricky, variable costs in outsourced bookkeeping can fluctuate, often increasing and affecting unprepared accounting firms.
On another note, these models are not fighters but actually complement each other. Knowing these details helps you make the best choice for your outsourced bookkeeping strategies if you decide to do it. Pick the one that best supports your business, play “Eye of the Tiger,” and prepare for the thrill of the fight — ahem, strategize your outsourcing bookkeeping approach.
![is-outsourced-bookkeeping-really-saving-you-money-Enter-the-Outsourcing-Boxing-Ring-2](https://www.botkeeper.com/hubfs/creative-and-content/blogs/2024/7-18-24/is-outsourced-bookkeeping-really-saving-you-money-Enter-the-Outsourcing-Boxing-Ring-2.jpg)
Back to the Drawing Board: It’s Time to Choose a Better Bookkeeping Strategy
Okay, we know that outsourcing your bookkeeping can be a difficult decision, and although it could be the easiest way to deal with it, you should consider some of the downsides of outsourcing and make an informed and better decision with other alternatives. Here’s why:
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Is Your Work Predictable? Outsourced bookkeeping — and the prices associated with it — can be as variable as your workload. If your work is predictable, no problem, but if it’s irregular or has spikes during certain seasons of the year? You are better off with something that can adapt to your working schedules.
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Review What You Make: Understand how much money you’re making from your clients to determine whether you should outsource your bookkeeping and whether it’s worth it based on your accounting firm’s size. Consider better options that can benefit you without sacrificing your profits in the process.
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List Out the Tasks: If you choose to outsource your bookkeeping, know exactly which tasks you’ll need them to do for you, such as managing payroll, doing taxes, keeping track of cash flow, etc. But lower your expectations, as they might not be your Cinderella’s glass slipper for everything you outsource.
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Pick a Pricing Strategy: If your accounting firm bills by the hour for the value it offers, a fixed outsourcing bookkeeping model can be more like restraints for your capacity and capabilities than a true benefit.
That’s why bookkeeping software like Botkeeper (you thought we wouldn’t mention what we do?) can be a better option for managing your bookkeeping needs.
And while we’re not saying outsourcing doesn’t work, automated accounting offers a more reliable, efficient, and cost-saving way forward. It also makes your work more efficient and adapts to your bookkeeping needs, making the old dilemma of which pricing model to pursue more about strategy than ever.
![is-outsourced-bookkeeping-really-saving-you-money-Back-to-the-Drawing Board-2](https://www.botkeeper.com/hubfs/creative-and-content/blogs/2024/7-18-24/is-outsourced-bookkeeping-really-saving-you-money-Back-to-the-Drawing%20Board-2.jpg)
Automated Bookkeeping Is Where It’s At
Automation lets you keep your bookkeeping right where you want it — in-house and simple. And here’s where we enter: Botkeeper helps you free up your team, work faster, and get the numbers right without the cost and hassle of outsourcing.
Botkeeper Infinite does the boring stuff automatically, keeps client work organized, keeps your files safe, and sorts out finances fast for a smaller month-to-month price than you’ll pay for outsourced bookkeeping. Try it yourself; you’ll wonder how you ever did bookkeeping without it.