Save Money By Outsourcing

Published - Apr 05, 2022

The allocation of financial resources is perhaps one of the most stressful tasks on your plate whilst running your business. There is a lot to weigh up in-order to maximise the ROI and nurture your business. We would need to look at your books to help you develop a financial strategy, but there is one tip that works for every business. Outsource as much as possible.

Why Does Outsourcing Save Money?

There are so many reasons for outsourcing, but two of the main reasons business owners outsource is it saves money and provides access to higher levels of expertise than they could otherwise afford.

In the majority of cases, you would pay an agency, freelancer, or consultant less than you would spend hiring a full-time employee or a team of full-time employees. But there are also a lot of costs when you become an employer.

• Recruitment costs
• Training
• Benefits
• Pension
• Insurance
• Office rental
• Equipment
• National Insurance

When you outsource a business function, you don’t have to pay these costs. If you outsource to a company or agency, that business will handle those costs for its staff. If you outsource to a freelancer or consultant, then they are responsible for handling those aspects themselves.

Another benefit of outsourcing is that you only pay for the services you need when you need them. If we look at finances, for example, most small or medium size businesses do not have finances complex enough to require a permanent CFO. There is simply not 40 hours per week worth of work to do. By outsourcing this function, you “hire” a team of specialists covering all aspects of finance, from bookkeeping to management Accounts and KPI reporting to strategic support. You can also receive support with payroll, VAT and statutory if needed. You spend a lot less than you would if you hired a team, and you get specialist help instead of hiring a generalist to handle all of your business finances.

Comparison

Let’s compare the cost of outsourcing vs hiring staff so you can see the costs involved. For example, let’s say your business has grown, and you can no longer handle your bookkeeping and management accounts by yourself. There are a lot of expenses each month, many of them tax-deductible, and you are sick of staying up late to do your own bookkeeping.

The average salary for a finance assistant is around £27k per year, we will use this number for our calculations.

• Salary £27,000
• National Insurance £3,726
• Pension £810
• Recruitment £4,050
• Benefits £3,780
• TOTAL: £39,366

  That cost doesn’t take into account costs for office space, necessary equipment or software, or ongoing training. In comparison, the cost to outsource your bookkeeping can range between £10,000 and £30,000 per year, depending on your requirements. When you work with a reputable company, you can access a high level of expertise and a range of financial services that you will need as you expand.

What Should I Outsource?

In the beginning, you should try and outsource as much as possible; we generally suggest outsourcing all of your non-core functions. The more you can take off your plate, the more time you have to focus on growing your business. By outsourcing early on, you can get someone on board immediately without downtime for hiring, training, and orientation.

Technical roles will benefit from outsourcing because the skills these roles entail mean higher salaries. We recommend you outsource financial services, IT support, legal support, HR Support and web development. By outsourcing, you can pay on a per-project basis or select a monthly package that covers only the services that you need.

Posted in Finance on Apr 05, 2022