5 Great Reasons You Should Outsource Your Accounting and Payroll
If your business is currently handling finance functions such as bookkeeping, payroll and accounting using internal staff, you may be wondering if this is the best approach. Sometimes it seems like accounting and payroll staff are busy at month-end or just before payday,but they really don’t have much to do at other times of the month. Finding and retaining skilled employees is a huge challenge in the Canadian labour market, so turnover is always a real concern.
In almost all cases, unless you are a large business, it makes far more sense to outsource these functions to a specialized outsourcing firm. At Xen Accounting we have helped countless growing companies make a smooth transition from an in-house to an outsourced finance system. Here are 5 of the key reasons why this kind of move makes sense:
Outsourced accounting and payroll firms handle multiple clients with different reporting dates. They want to help you build a smooth and efficient monthly process around key accounting, payroll, and reporting functions. They employ logical schedules, with clear client approvals and sign-offs, and there is no extra “busy work” that sucks up time and energy. In short, the goal of outsourcing your accounting or payroll should be to increase efficiency and reduce time spent on these “non-revenue generating” functions. Furthermore, as one of Canada’s leading cloud accounting firms, Xen Accounting is taking the efficiency gains you can expect to the next level, by employing the latest cloud technology.
By outsourcing your accounting and payroll to a specialized firm like Xen Accounting, you are gaining access to an entire team of experts in the field, and you will benefit from best practices. On the other hand, if you ask internal staff to handle these functions, you are usually relying on only one person’s experience or skills. Sometimes you may get lucky and find a superstar staff whom you can rely on, however, we often see cases where internal staff did not have the full range of skills or expertise to handle core finance and payroll functions.
There is usually substantial cost savings to be had by outsourcing your payroll and accounting functions. Full-time payroll and accounting staff in Canada tend to be very expensive hires, and unless you are a very large firm, there may not be enough accounting work volume to necessitate having a dedicated full-time staff. For example, employing one full-time experienced accountant and one experienced payroll staff can easily cost upwards of $150,000 per year. An efficient outsourced firm can usually handle these functions for about 1/3 of the cost. These savings can be re-deployed to revenue-generating hires.
Removing HR Risk
When you have internal staff handling your accounting and payroll, you have a single point of failure situation. What happens if your accountant or payroll person suddenly becomes ill or quits? Can you afford to have a situation where your employees may not get paid on time or financial reports to head office are late? By outsourcing these critical back-office functions, you will no longer have a single point of failure but are gaining access to a whole team of experts who will ensure things stay on schedule.
Furthermore, employing internal staff in Canada comes with a whole host of potential risks and responsibilities. Why not allow these functions to be done by an external partner that is highly specialized.
Confidentiality of Financial Data
Your accounting and payroll data is highly confidential. Granting access to this information to your in-house staff is always a very risky endeavor, no matter how trusted they are. Having a team member having access to peoples’ salaries can lead to unnecessary conflicts and risks. We like to work with our clients to determine who (generally only key management) has access to payroll, bank, and financial reports. Maintaining this confidentiality and discretion is of critical importance.