The accounting profession is experiencing an issue of attracting talent that may not always be remedied by posting yet another local position. CPA firms have been handling rising client demands, increasing complexity in the finance field, and increasing speed requirements while seasoned accounting professionals are hard to come by. At the same time, many CPA firms want to expand their businesses without constantly increasing their fixed payroll costs.
That is why CPA firms are beginning to look at different means of staffing than the traditional hiring method. Outsourced accounting services for CPA firms may provide them with the availability of accounting professionals without having to develop all positions within their own business. Rather than thinking about outsourcing merely as a way of reducing costs, CPA firms can take advantage of outsourced accounting professionals in order to gain additional capacity and handle repetitive tasks.
Why Local Hiring Alone Is Becoming Harder for CPA Firms
Conventional hiring still holds great value; however, dependence on conventional hiring alone can create problems. The company may want to hire experienced accounting professionals exactly when other accounting firms are recruiting the same professionals.
The hiring process is time-consuming. It can include job posting, screening of applications, conducting interviews, evaluating qualifications, making an offer and onboarding the hired employee.
Despite all these efforts, the new hire may not remain in the company forever.
The Accounting Talent Gap Is Not Just About Hiring
CPA firms can use various skills of accounting specialists. A developing company may need people who can perform bookkeeping, reconciliations, accounts payable, accounts receivable, financial reporting, payroll accounting, or any other accounting duties.
Just because of one hire, it does not mean that the problem of capacity is solved.
The company can have enough senior accounting specialists, but not enough staff for routine accounting tasks. Conversely, a company can have enough junior specialists, but they may need constant supervision before taking up more complex tasks.
This leads to the capacity gap.
Accounting outsourcing for CPA practices provides another way to address that gap by giving firms access to additional professionals when internal resources are limited.
How Outsourcing Gives CPA Firms Access to a Wider Talent Pool
Limiting local hiring means that only people who are accessible and willing to work in the firm's geographical and employment structure will be hired.
This approach is altered by outsourcing.
Rather than hiring an individual person for each new position that emerges, the CPA firm may rely on the expertise of an outside group which already has all the accounting personnel required for working with clients.
Such a team can include:
- Bookkeepers
- General ledger accountants
- Accounts payable clerks
- Accounts receivable clerks
- Reconciliation experts
- Financial reporting experts
- Payroll accounting experts
- Accounting analysts
- Industry-specific accounting personnel
Access to Skills Without Building Every Role Internally
A major advantage of working with accounting outsourcing partners for CPAs is flexibility.
Every single accounting task does not necessarily require a dedicated full-time employee.
The company can also be in a position where it will require more resources on hand for a short period of time, a particular set of clients, or as a long-term business strategy.
An outsourced team can easily scale to match the work flow.
For instance, a CPAs that has increased its clientele of small businesses may have the need for more bookkeeping and reconciliation. Instead of rushing into hiring multiple full-time employees, the CPAs can make use of an outsourced accounting team to perform the routine tasks while the employees attend to their client services.
What CPA Firms Can Outsource Without Losing Strategic Control
Outsourcing does not imply delegating all responsibilities concerning accounting to an external entity.
CPAs can decide what tasks can stay within their scope and what can be delegated to third parties.
Repetitive Accounting Responsibilities
There are a number of repetitive accounting tasks that occupy a lot of employees' time.
It can include:
- Recording transactions
- Bank and credit cards reconciliation
- Payables accounting
- Receivables accounting
- General ledger management
- Month-end closing assistance
- Preparation of financial statements
- Accounting data cleansing
- Routine reporting
CPA firms can develop procedures for controlling and review and keep under control communication with the client and the delivery of the final product.
Thus, there will be a separation between execution and review.
Back-Office Assistance for Increasing Client Base
If CPAs increase their client base faster than their headcount, it can put the additional pressure on their employees.
Outsourced accounting services can help CPA firms increase their capacity without expanding their staff at once.
This way outsourced accounting can be useful for those firms who experience fluctuation in their client base.
The firm can be busy with many clients for several months and then become less busy. It is not always efficient to keep a larger workforce during a period of low demand.
How Outsourcing Can Help CPA Firms Improve Staff Productivity
Talent shortages will not be the challenge only in hiring but in how the current staff spend their time as well.
Experienced CPAs can dedicate a lot of their daily time to reviewing repetitive work, fixing accounting problems, handling administrative work and dealing with repetitive processes.
This can mean there is less time spent on:
- Advice for the client
- Tax planning
- Business development
- Financial analysis
- Relationship management
- Practice management
- Complicated accounting issues
It is important to properly delegate the repetitive accounting work so that the internal staff can concentrate on those areas where their experience is required.
Creating a Better Division of Responsibility
The right outsourcing solution will not necessarily mean eliminating the internal team of a firm.
It can actually form the hierarchical workflow when:
The outsourcing accounting team performs the repetitive accounting work.
CPA firm staff reviews the work done, deals with exceptions, communicates with the client and deals with the more complex accounting issues.
Partners/senior professionals handle advice, relationships, business development and decision-making.
Why Cost Is Only One Part of the Outsourcing Decision
While cost savings can be linked to outsourcing, CPA firms should not base their judgment about outsourcing on cost per hour alone.
The important thing to ask is whether outsourcing helps the firm to build up capacity and economics.
A cheaper service that needs a lot of supervision will not make much difference in cost savings.
CPAs should look at the following:
- Quality of accounting services
- Expertise level
- Time required
- Methods of communication
- Compatibility with technology
- Requirement of review
- Scalability
- Data security
- Training
- Management time
- Impact on client services
The best accounting outsourcing partners for CPAs should enhance their capacity, not add another responsibility to their management.
How to Choose the Right Outsourcing Model
Every CPA firm doesn’t have a single model of outsourcing that will work perfectly.
Some firms may require help only for particular accounting operations while other firms may need professionals who can provide continuous help alongside their internal staff.
Look at Workload, Complexity, and Customer Expectations
Before outsourcing, CPA firms need to find out what is the reason for the lack of talent.
For example:
- What are those accounting activities that are causing the problem?
- How many workloads are there at the moment pending for the staff?
- What type of work involves CPAs' decisions?
- Are those accounting activities that can be standardized?
- Are the workloads temporary or permanent?
- What kind of timeframe will it take?
- What is the review process?
Protect Client Relationships and Quality Standards
CPA firms should also be setting clear expectations regarding who should communicate with their clients.
In many cases, the CPA firm acts as the primary face-to-face entity, while the outsourced team works off-camera.
Clearly defined processes should cover:
- Who assigns the task
- Who checks the finished job
- Who communicates with the client
- Who answers client questions
- Who reviews final output
- How to escalate issues
This allows for meeting the firm's standards and maintaining client relationships while building capacity from outside.
A CPA firm does not have to choose only one of the two options – hiring or outsourcing. Instead, a hybrid workforce might include both internal professionals and external accounting experts.
Properly done outsourcing of accounting for CPA firms may become a useful solution to fill talent gaps, create additional accounting capacity, cope with periodic accounting workload and free experienced professionals for advisory and client-related tasks.
Choosing the appropriate model depends on many factors such as accounting workload, service delivery model, quality requirements, etc. Outsourcing accounting for CPA firms with the help of The Fino Partners will enable CPA firms to create a better accounting operation in the USA.
