When a Client Tells Us They’re Thinking of Taking Their Accounting Office In-House

Every now and then, a client comes to us and tells us that they’re thinking about taking their accounting in-house. 

The natural knee-jerk reaction would be to get salty. Fine! Good luck! Don’t let the door hit you on the way out! But the reality of the situation is that it warrants examination. Sometimes it is the right move for a business to take things in house. Sometimes it isn’t. What we try to do in these instances is help our client look at this decision from all angles. 

Here’s what to consider. 

Brains, Muscle and Costs

With an outsourced accounting partner, a business typically has multiple team members working on their account. Not only does that lend more experience and expertise, but it also offers more execution. Conversely, taking things in-house often starts with creating a department of one that almost certainly costs more than outsourcing. 

Do the math. If a business pays its outsourced accounting partner that supplies bookkeeping and payroll services X and the total cost of one in-house person to handle everything is 10X, the numbers don’t really add up. 

Business Knowledge

There’s something to be said for the accounting function to be living “in the business.” There’s day-to-day familiarity, on-the-ground operational insight… even being able to pop over to someone else’s desk for quick conversation has its benefits. Good accounting firms, on the other hand, will immerse themselves in their clients’ businesses. They’ll ask questions and drill into processes. And there’s something to be said for an apolitical position: A third party vendor is often more comfortable speaking the truth. 

If a business feels that its accounting office will best succeed when it’s entrenched in the day-to-day operations, then in-house might be the right answer. 

Willingness to Participate

Oftentimes we’ll need certain information from different folks inside our clients. If extracting that information is difficult or inhibited for whatever reason, a successful relationship is unlikely. 

In those instances we’ll often recommend that the business take (or keep) its accounting in-house until internal resources are more amenable to working with an outsourced provider. 

Software

When a business is first thinking about bringing its accounting office in-house, it often doesn’t think about software and associated costs until later. As an accounting firm certified with numerous accounting, bookkeeping and payroll software applications like Xero and Gusto, we’re able to spread those costs across our client base. This results in our clients paying less for software than if they were to sign up directly. 

What’s more, we live in these applications all day, every day. A number of our folks are certified practitioners. That’s all to say that a third party provider is typically going to have far more knowledge and familiarity with the software applications required to run your books than someone internally who might have other responsibilities. 

Lessons Learned, Lessons Applied

A key benefit of an outsourced accounting partner is that they have other clients. Those other clients present all sorts of situations that your accounting partner has to solve or guide them through. Those experiences – and the knowledge gained – are free to your business. 

Bookkeeper Doesn’t Mean Accountant

We love bookkeepers. We have a bunch on our team that are exceptional at what they do. Many of them are great accountants too. But that isn’t always the case. We’ve seen it countless times: A business says they’ve got someone who can “do their books” in-house, but in reality, they’re just doing data entry – which very much is not accounting. 

Scalability

When business is booming, it’s easy for an in-house bookkeeper or accountant to get overwhelmed. (The answer is usually to hire.) Likewise, if there are lulls, an in-house accounting resource is still costing the business multiples it would cost to keep a third party provider on board. 

This is a tough criteria to weigh, but it’s necessary to consider. 

So What’s the Answer? Outsource or In-House? 

The answer always depends. But one thing you can be certain of: We’ll always give it to you straight.