“Do what you do best and outsource the rest” Drucker (1989)

By Russell Gibson, Outsourcing Manager

What is outsourcing and why outsource?

Many businesses have been outsourcing their accounting since the 1990’s. The scope of outsourcing ranges from the SME that submits its quarterly records for number-crunching to be  turned into a VAT return (and possibly to generate management accounts); to the company that outsources its entire back office function (HR, IT, Finance); to a larger organization that TUPE’s (transfers its undertakings) in terms of finance and/or other non-core teams to a separate entity.

The common themes of outsourcing can be summarised as:

  • Generates savings – transferring a function to a lower cost base.
  • Business focus - the entrepreneur is free to concentrate on taking care of business without the admin burden. This requires trust, so outsourcing works best when the outsourcer becomes a trusted advisor.
  • Access to expert advice – avoid the cost of getting it wrong.

How has it changed?

The reasons to outsource are stronger than ever, as markets get tougher, and the cost of mistakes higher. Fortunately, successful outsourcing has been made more manageable due to the improved availability of data sharing technology through the internet. This is particularly applicable to the small or medium sized business. The days of the brown envelopes full of invoices and bank statements are numbered, as businesses make increasing use of the data sharing so cheaply available these days, such as Document Sharing Portals, internet banking, e-payslips, and perhaps most importantly web based accounting solutions. The entrepreneur and adviser have access to the same management information which becomes live as soon as the data processing is complete. So the dialogue between client and adviser is continuing, as opposed to quarterly or annual. This will become ever more important when tax goes digital and needs regular, as opposed to annual, attention. The relationship between business and adviser is getting closer.

To discuss any points raised above, please contact our outsourcing manager, Russell Gibson, russellgibson@lubbockfine.co.uk, or one of our partners, Andrew Noton andrewnoton@lubbockfine.co.uk or Neil Williams neilwilliams@lubbockfine.co.uk.

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