No matter what the size of your business or industry, studies show that the average Australian business owner is paying too much for professional accounting services. So just what is too much, and how can you get the balance right?
A fully staffed accounting department costs the average small business upwards of $350,000 per annum. Micro businesses (those with less than 3 employees) pay around $120,000 per annum in internal and external accounting resources and both examples could be paying less than half that amount.
Getting the balance between cost and quality right however, can be difficult. And when it comes to professional accounting services, that difficulty increases exponentially with the complexity of the business. From payroll, accounts receivable, accounts payable and bookkeeping to strategic financial direction, the average business needs all of these services but gets side-tracked with roles and cost, opting instead to retain the more basic services in an employer / employee relationship. This then leads to paying too much for services that are not always required – and failing to retain expertise at all on services that are essential.
“Business owners often rush into an employment arrangement,” says Kyle Clarke, Managing Director of Start Grow Run. “The reason for this usually stems from a misconception of the accounting profession and the part each role plays in the process.”
While some accountants and specialists like to charge in 6-minute increments and bill you for every phone call made, others may inadvertently cut corners and leave you holding the bag with the tax department or other regulatory organisations. In a bid to get everyone working together, some business owners choose to bring everything in-house – employing bookkeepers, finance managers, and even CFO’s. But there is a better way.
Consider the following:
(1) An external accountant will charge you to re-enter data already entered by your bookkeeper. You are therefore paying a bookkeeper to do a job that will have to be re-done.
(2) Bookkeepers are not professionally qualified – you wouldn’t trust your electrical work to an unlicensed electrician – the same applies here.
(3) The simplicity of MYOB or XERO is misleading – without the right checks, balances and processes internally, your books are likely to be wrong.
(4) Most business owners are not qualified accountants, so how do you know that what is being done by your accounting employees in correct? (Even if you have an accounting degree and can read a P&L, are you up to date with the latest standards?) Will costly errors continue until an external accountant finds the error months later? What will the cost of that error be to your business?
(5) Inaccurate and incorrect treatment of ledgers, balance sheets and P&Ls will give you false information – don’t let bad books lead you into bad decisions.
(6) Staff cost money. They cost money to induct, train, maintain, motivate and retain. Outsource what you can and pay only for what you need.
(7) An outsourced accounting provider can provide you with access to a highly qualified team that would ordinarily be too costly to employ internally.
(8) An outsourced accounting provider will only charge you for what you use and need – which is easily scaleable as your business needs change.
(9) Worried about outsourcing? Changing an outsourced provider is much easier than removing an employee.
Start Grow Run provides accounting and business management services from right here within Australia. Unlike some of our competitors, we don’t outsource work to sweat shops or cheap overseas providers. Best of all, we pay for the systems and software required to keep your business running smoothly.
In small business, tailored information is critical. Start Grow Run provides valuable information exactly when you need it – not when it’s too late to change the outcome.
