What is the difference between insourcing and outsourcing, and how does it affect your company?
When planning a project, your business must decide what workforce stream to leverage for that specific task. Do you use internal resources to get the job done? Or find an external provider? This is true for any project as well as necessary services like accounting. Is it a better value to hire an internal CPA, or to outsource to an accounting firm?
Froehling Anderson looks at the advantages and disadvantages to both insourcing and outsourcing, and how to weigh what’s best for your business, below.
Pros of Insourcing Accounting
Using resources that your company owns in-house gives you more control. With the entire process staying on-site, you can fine-tune every aspect. Insourcing also provides an excellent opportunity to promote from within. Internal promotions increase company morale and create a feeling of ownership, so the project will be more personal.
Cons of Insourcing Accounting
A huge potential downside to insourcing is the cost, both financially and in resources. If your company re-allocates a staff person to that task, then they are tied up in the project and not available for other tasks. If your company decides to acquire that resource, then the lifetime cost of it falls on the company’s budget. This could be salary, benefits, maintenance, and all other forms of expensive charges.
Pros of Outsourcing Accounting
Conversely, outsourcing can be a cost-effective solution for acquiring a specialized resource only when it is needed. In the example of an employee: a highly skilled contractor or firm can help finish a project, but then your company doesn’t need to carry their highly-skilled salary on the budget all year long. This project-to-project model also allows your company to hire a fully developed resource, instead of having to train one in-house.
Outsourcing can be particularly effective for back-of-office accounting and cost centers. Companies tend to focus on sales and development areas that drive revenue. This can cause accountants and other cost-related jobs to feel left out of the company culture. With outsourcing, the back-of-office jobs are the revenue generators, so those positions feel important.
This leads to happier employees working on your project and more passion brought to the table. Plus, no in-house employees feel as if they are getting left behind or removed from key company operations.
Finally, by outsourcing accounting services to an expert firm, you’re able to tap into the experience of a team of highly skilled CPAs, without the salary and benefit expenses incurred.
Cons of Outsourcing Accounting
Outsourcing lets you only see the end results. With large outsourcing resources, their services are often generic to satisfy a large client base. Because of this, work done by an outsourced asset can lack your company’s signature style or voice - which is why it’s important to choose the right firm.
What is the best option for my business?
The best option for your business depends on the project and your resources. For large organizations with ample budgets, insourcing can make more sense –especially if you want to grow your in-house accounting to an entire team.
For other organizations, outsourcing accounting services is the more economical option that allows them to outsource services as needed and tap into a whole team, for lower cost.
Froehling Anderson offers a wide range of outsourced CPA services for your business. From tax, business advising, audits and much more, we make sure your business is running optimally and in compliance. We can help with outsourcing work anywhere from basic bookkeeping to CFO services, so contact us today to secure the financial future of your company.
Froehling Anderson is a Minneapolis-based CPA firm and a member of AGN International, a global association of separate and independent accounting and advisory businesses. We provide business consulting, tax, audit and accounting services to a wide variety of industries, including construction, manufacturing & distribution, not-for-profit, professional real estate, and athletes & high net worth individuals.
