Your clients want it. You want to give it to them. That much we know. However, the challenge for accountants has always been how to offer a profitable bookkeeping service. If you bring the service in-house you get all the downsides of employing someone and very little of the upsides of enjoying a healthy profit margin on the work.
This article explores the 5 ways in which you can offer a profitable bookkeeping service to your clients.
This is probably the traditional way that most accountancy firms service their bookkeeping work. Use a trainee who is young and keen, but more importantly pretty cheap. They could be especially cheap if you have brought them in on an apprenticeship. The downside of this arrangement is they don’t stay a trainee for long. The good trainees will be hungry for more interesting and stretching work. This means, just as they get to the point when you can leave them alone to service the work, they either transition onto doing accounts work, or up and leave for brighter lights elsewhere.
Outsourcing is a fairly ‘marmite’ way of doing your bookkeeping at a profitable rate. Those accountancy practices that have made it work for them love it. Those that have had bad experiences would never ever consider it again. Outsourcing, just as if you hire a new member of staff, has a learning curve. Once you have overcome this learning curve, then it is not unusual to make savings of up to 40% on your bookkeeping costs. The great thing about an outsourcing service ,which is on a ‘pay as you use’ rate, it is completely flexible and very scalable. I.e. you can turn it on and off at will. So, no more paying staff to sit around and do nothing.
If you do consider going down the Outsourcing route, make sure your chosen provider can give you quality and turnaround guarantees.
3. Joint Venture or Alliance
This can be a pretty neat route to take. You find a bookkeeping company you trust and form an informal or formal alliance. You send them all your clients’ bookkeeping work and they send you all their accounts prep and tax work. It can literally be a match made in heaven if it works. Everyone gets to do what they are good at. But, and this is a big but. You don’t get to make any profit on your clients’ bookkeeping work. You are also reliant on your bookkeeping company’s reliability and quality.
4. Sub Contract
This is a very similar solution to outsourcing. You find some local bookkeepers that are happy to work with you on a freelance basis. In some ways this route has all the benefits of outsourcing, whilst still being able to meet up in person with the people doing your bookkeeping. In other ways it has many of the challenges of employing staff without actually employing staff. You still need to make sure their work is up to scratch, and potentially need to provide them desk space in your office. You may find that if any of these freelancers are good, they will become full fairly quickly. Then you are back to square one. Given that a Irish based freelancer will be working on Irish salary rates, you may find that any profit margin you make on their work will be slim.
5. Offer a fixed price all-in to do all the client’s accounts prep and tax compliance work
This is an option, which you may find yourself, making a small loss on the bookkeeping work. This loss is more than off set on the profit margin you can make on the accounts prep and tax compliance work. Whilst the profit margin is good, you still have the headaches of managing your staff – and all that entails.
The best solution for your practice may be a combination of some of these methods. There is no ‘one-size fits all’ solution when it comes to offering bookkeeping.