Growing an accounting firm, like many other kinds of business, used to be fairly straightforward. You deliver great work for clients, which results in gaining more clients and you expand your team to increase capacity, along with gradually reworking your services and value proposition as you evolve. However, the industry today is in a more complex place. Accounting talent is hard to find and retain, and the costs of boosting your headcount aren’t always as obvious as simply taking into account an increased salary bill and recruiter fees.
In this guide, we explore some of the hidden costs involved in accounting recruitment and look at ways to mitigate these so that your business can continue to grow and thrive.
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When you decide to recruit an accountant, whatever their level of experience, the more obvious costs include:
It has to be taken into account that many ongoing costs when you recruit a new accountant are fixed, regardless of your firm’s low or variable demand periods. Utilisation can decrease at various times but your costs do not, which always has an impact on your margins.
These headline costs associated with increasing your staff headcount are usually well understood. But many firms can underestimate other accounting recruitment costs that can sometimes fly under the radar but end up being a significant sum for every new employee you take on.
These costs are not actually hidden when recruiting, but they are not always given much consideration and can sometimes come as quite a shock when the full true cost is calculated. For smaller accounting firms, these sums can often feel amplified, as it’s a greater percentage of the turnover involved. Some of these less obvious costs include:
While this might not be as big a cost for larger accounting firms with dedicated HR and recruitment teams, for small accountancy businesses, the people drafting the job description, reviewing CVs, interviewing candidates and even negotiating offers, are those who would otherwise be doing billable work or growing the firm. While using recruiters can often help to minimise the admin, that also has an associated cost to factor in, and there will always be a degree of management and staff time needed to facilitate successful recruitment.
New recruits, no matter how experienced, all need time set aside when they start onboarding. At its top level, this can mean setting up new systems and adding new accounts to tools and software solutions (which also usually has a cost for new licenses or users) but may also mean training in your specific workflows and tools. This is accompanied by some time being needed to get to know how things work in your client files and any regulatory training, such as fire safety, plus essential admin like setting the new employee up on payroll.
During this ramp-up period, productivity of the new recruit is lower, and other staff will also usually need to divert some of their time to help support. This all takes away from billable work.
With the current talent shortage, attracting great accounting staff can often require that you offer a package that is more attractive than competitors. Along with the basic salary, this also includes benefits that are over and above the statutory requirements, such as enhanced maternity/paternity/sick pay. You may also offer perks such as additional annual leave allowances, performance bonuses, private health cover, professional subscriptions, an annual training/career progression allowance etc. These are increasingly common for new hires in the industry, and all have an associated cost to your business.
No recruitment process is perfect, and there is always the risk that the new recruit won’t work out or simply isn’t a good long-term fit for your business. If they need to be replaced, you’ll usually have additional costs that weren’t necessarily budgeted for, to pay for the whole recruitment cycle again.
As well as the direct financial costs of this, a bad hire that goes sour can also have an impact on not only the individual’s productivity, but also that of other staff, if the morale or team relationships are affected. Their dips in productivity, or having to divert their time to cover for the additional workload that now needs to be picked up, can also be a significant cost to the accounting firm.
One way to mitigate many of these additional costs could be to outsource routine accounting tasks to a trusted and proven partner. This can enable your firm to expand your capacity for new clients or if there are increases in service demand, but without having to recruit for your in-house team. Some of the benefits of this approach can include:
A predictable, scalable cost structure: Outsourcing providers will have a clear pricing structure for the types of accounting tasks you need to fulfil, which can help you to manage your budget more effectively. You avoid many of the statutory costs, NICs, pension, etc., associated with hiring fully in‐house, and of course, no additional employee benefits or perks are needed.
Reduced onboarding lag to full productivity: Tasks that are outsourced are handled by teams, or accounting pods, who already know the processes. This means that minimal time is lost in ramping up and the service remains highly efficient at all times.
Reduced HR & management burden: Your outsourcing partner handles all of the HR, staffing, training, compliance for the tasks taken on. You don’t need to hire and manage those routine functions, which frees up direct costs and indirect ones, such as the time taken by senior staff during accounting recruitment for a new role.
Flexibility: You can scale services with your outsourcing partner, which is an ideal way to manage peak times of the year, such as just before self-assessment return deadlines. You can plan ahead and fulfil all of your client’s needs without committing to longer‐term fixed costs.
Freeing up in‐house talent for value‐added work: By outsourcing the routine, repeatable, lower margin work, your existing team can focus on advisory, planning, strategic analysis and other value add services, which is what most firms and clients value most. This tends to be higher margin, better for differentiation, and more satisfying for staff, so everyone wins.
A lower risk of bad hires: The burden of recruiting, managing, and perhaps replacing staff for routine tasks is offloaded through strategic outsourcing. This means that your business takes on far less risk in terms of turnover or mismatched skillsets.
If you want to explore how outsourcing could help your firm succeed and grow while lowering your recruitment costs and risks, we’d love to talk. Book a call with our team today.
