Due to the extremely competitive nature of the accounting profession in the UK, many UK accountancy firms have had to add additional services to their repertoire to compete effectively with other firms.
In any industry glutted with competing companies, the only three choices left for businesses in that industry are:
- Offer more services
- Become more efficient
or - Lower prices
Lowering prices can lead to an endless downward spiral where, ultimately, services being offered are so cut-throat cheap that:
- Quality suffers (leading to lost clients)
- A company’s staff becomes overworked
- A company struggles to make ends meet
One choice which many accountancy firms have turned to has been outsourcing.
How outsourcing has been used by UK accountancy firms
Accountancy practices tend to outsource repetitive daily tasks such as bookkeeping, payroll processing, bank reconciliations, etc. It doesn’t take a genius to carry out these tasks, just someone to sit down and do the job.
Theoretically speaking outsourcing is supposed to offer a solution to each of the above three problems:
- Offering more services (while not having to reduce price too much).
- Becoming more efficient (because the workload is shared).
- Lowering prices to a degree, but not necessarily suffering the excessive workload as a result.
That’s in theory.
In practice, the matter is a little more complicated — especially in accounting.
The problems and dangers of outsourcing accounting services
In accounting, specifically, there are a number of caveats, pitfalls and outright dangers to outsourcing accounting services.
Double-checking work
Accounting is a tightly regulated industry. Professionals are overseen and governed by supervisory bodies such as the ICAEW, the ACCA, the AIA and others.
Errors in accounting and tax returns can lead to legal repercussions for clients, and subsequently for their accountants.
As a result, the first problem accountants run into when outsourcing is that everything which was outsourced must be double-checked internally.
That doesn’t lead to a lot of saved time in the final calculation.
Data privacy
The second problem is this matter of Data Privacy or, more specifically, Europe’s GDPR.
Very often, outsourcing work is carried out in countries whose currencies are not that strong — typically, countries outside of the EU.
Immediately, that poses a data privacy situation which could have costly repercussions.
But even if the outsourcing company is based in the EU or in the UK, handing over personally identifiable information to any third party opens the door to abuse.
The consequences of any resultant leaks of private information would then fall on your doorstep, as it is your company which is ultimately responsible for the client’s data.
Brexit does not ameliorate this situation very much, either. The UK has its own stringent data privacy implementation under the Data Privacy Act of 2018.
And more and more legislatures are enacting data protection laws, making the subject a hot one that must be observed with due diligence by accounting firms.
In today’s global village, it is rare that an accountancy firm will only deal with UK-based clients, or that it will deal with personally identifiable information of only UK citizens.
Hidden costs
The other caveat to outsourcing is that sometimes there are costs hidden in the fine-print of services advertised by an outsourcing company.
These costs can include additional hourly rates for high-pressure jobs. (Every month-end is “high-pressure” for accountants, so you need to watch this point carefully.)
The prime benefit of outsourcing has always been its “cheapness”. If the pricing starts to go out of control, it becomes pointless to continue using an outsourcing company.
Other issues
Other potential problems with outsourcing can include:
- Language problems if the company’s primary language is not English.
- Time-zone issues if the company is located in a different time-zone.
- Lack of “personal touch” to accounts (which is often a key factor for “Premium Service” offerings).
No alternative solutions to outsourcing
Despite the above issues, there has simply been no other choice besides outsourcing, up to this point, for firms that wanted to remain competitive.
Many accountancy firms either continued with the regular stresses of outsourced services or reached a point where they realised that the only solution was to sell their accountancy practice.
Other problems that UK accountancy firms face
Aside from struggling to keep up with workload, the other common problem with accountancy firms is that they have difficulty keeping up with marketing and promotion activities.
Failure to market effectively means a firm will be in peril, as it will not be getting in new clients.
Yes, word of mouth is great, and it would be wonderful if it was the only marketing ever needed.
But it’s not.
The evolved solution: White-Label Accounting & Marketing
It was these very issues which prompted us — multiple experienced, accredited UK accountants — to start We Run Your Practice.
We saw that accountancy firms who were struggling needed two things:
- Reduced workload
- And better marketing
Outsourcing accounting work is perilous at best, and pointless at worst. If you have to double-check everything anyway, why bother?
And, without marketing, you won’t survive for long because you just can’t make it without a steady stream of new business coming in.
This evolved into what We Run Your Practice offers today: A white-label accounting and marketing solution for accounting practices.
Not outsourcing, but transparent, regulated, reliable and local accounting and marketing done under your company’s name.
It’s not outsourcing at all. It’s an evolutionary step.
