To start the new year weâve put together a comprehensive guide to how you should approach outsourcing, from âwhat can I outsource?â through to the key questions you should ask of your own practiceâs strategy and operations. AdvanceTrack founder and MD Vipul Sheth fields the questions from Kevin Reed.
What is the âstarting pointâ?
While outsourcing as a concept is well understood, practices can struggle to align that concept with the running of the business. Unless you see outsourcing as a strategic part of delivery for your firm, it wonât work.
For example, do you understand how youâre utilising your current staff and that outsourcing could create great (and positive) change to them?
Ultimately, do you want your people and practice processing data? I think that, instead, youâll make more money spending time sat in front of clients. Using an outsourced service can help you spend more quality time with clients. Youâll bill much more per hour and it will make you a proactive adviser in the eyes of your clients.
Your staff will be involved in those client-facing conversations and earn more money for you. And as their own value increases, youâll have more satisfied and better-paid staff. And happier clients.
What can a practice outsource? What are the most popular or standard types of outsourcing that take place, and how is that evolving?
In principle, any task where someone is sat at a computer and inputting manually has the potential to be outsourced, from tax work to bookkeeping and accounts production. Whatâs unlikely to be outsourced is the conversation piece with the client, unless there are some basic forms of administrative-focused communication. What tends to be outsourced early on, with relatively low risk, is year-end accounts â a popular choice. You have nine months to file a set of accounts so thereâs ample time to check without the client requiring visibility during that process. The information is not being changed live as it would be with bookkeeping. It sits in its own silo.
As for evolution, well, the biggest change happening is the need for real-time data. As a result of this, areas such as bookkeeping in the cloud are increasingly being demanded by the end-client. So, if they want real-time bookkeeping, how do you deliver that at scale?
And thatâs where we come in, helping to systemise in order to scale that service upward.
Once their information is processed consistently and quickly, youâre moving to real-time information. So, the achievement as a result of MTD compliance is you just need to press a button.
What types of practice outsource, and why? Do certain types of practice outsource certain types of process?
Itâs not really about size, itâs about attitude. Big firms would do it more because of their scale, but because of their size it means a lot of buy-in is required from a range of people. It can be done by them but requires a much more involved process.
When I meet the whole partnership, theyâll have gone through the whole âwhy?â journey; any change project requires leadership and sponsorship. And it can also fail with small firms, if someone in the chain doesnât go along with the plan.
How long can it take to get a process or function outsourced? Why does it take that long â or short â a time?
I could ask, âHow longâs a piece of string?â, but it can be fairly quick, relatively speaking. Again, it depends on both attitude and the will to harness technology. If a group of people understand tech and are prepared to standardise (which will require change in an organisation), then it will happen.
One of our most successful clients used outsourcing to standardise their working files. Instead of a different approach by client, office or partner, they said âthis is how we produce a file to support accountsâ. So, when that data comes to us it means that we know exactly how it has to be prepared.
How does the arrangement work between outsourcer and practice? What is the process and how secure is it?
For bookkeeping, we can work with cloud tools that are collecting client data and we sort it, then push it into accounting software and make sure itâs fully reconciled. An accounting firm might have someone continue doing this, but instead of looking after ten clients that person can now manage, say, 50 clients. Their work will also change â it wonât be about processing, but their time will be reviewing the outputs (while understanding how itâs put together) and work at greater scale with their end-clients. This also frees them up to speak to clients.
Once the initial work is done, some firms get us involved in undertaking management accounts and reporting on behalf of their clients. It requires skill to understand what youâre doing and how youâre doing it, but it can be systemised as well and enable you to speak to your clients in a consistent manner.
As a firm you can move to a subscription-type service and start having great conversations with clients. Youâre not reporting history.
On security, some in our industry believe that just because the outsourcing staff log into a firmâs network, they think there are no other GDPR or data protection requirements; we have lots of protocols required to keep client data secure. You canât just say, âweâre working on your servers in Londonâ; there is a separate requirement to undertake impact assessments around how that data is being accessed.
Then, beyond that, the protocols must be secure. We can work on a firmâs network, where firms have their own IT staff, to do work to ensure data accessed by our team members is locked down and things canât be abused.
What are the key advantages from a cost and process perspective that outsourcing can bring?
This may sound odd, but even in âyear oneâ of the project (even when factoring in internal time) youâre probably looking at break-even from a pure cost perspective.
But Iâd say that, longer-term, what you can achieve is more client-facing time, and as a result they bill more.
Theyâve also changed the type of person they recruit, not someone to work in an engine room but instead be comfortable sitting in front of clients, and talking sensibly and confidently about that business. Theyâre not having to talk to clientsâ FDs about deadlines and accessing information. And itâs a totally scalable process.
What else should my practice consider?
When I sit down with practitioners I say: âYou need to have a standard workflow.â So whatever is sent to us by whomever, it looks pretty much the same every time, while appreciating or understanding where there will be exceptions. Get standardised yourself and then expect that level of process rigour from the outsourcer.
Key questions to ask outsourcers
- What experience do you have in the outsourcing space?What credentials does the outsourcer have in place, and are they interested in how your practice operates? Try and speak to existing clients. This is all crucial as it will impact directly on your working relationship.
- Do you also run an accounting firm?Itâs not unknown for some outsourcers to also provide their services directly to what would be considered end-clients. Therefore, are they actually competing with you and, if so, are you comfortable with that?
- What credentials do you have that give me satisfaction that youâre trustworthy and reliable?Accreditations should be asked of the outsourcer. What are their processes and general approach to security and reliability? Where are their operations based, and can they be visited?
Key questions for the practice to ask itself
- Do you want to grow your business?Simply hiring more staff is a way to help you grow, but getting staff competent at processing complex accounting and tax data means theyâre sought after. Itâs also difficult to improve margins. Lastly, will this approach work when attempting to provide data to HMRC more regularly, and will clients start asking for better and more timely services?
- Do you want yourself and staff to be more client-facing?If youâre looking evolve your offering, then your staff will be vital in achieving your goal. Freeing them from processing provides an opportunity for them to help your practice evolve.
- Do you want to make more money?Improving margins and profitability requires you to improve your processes.