The benefits of accounting outsourcing are being realised Jenha White, Thursday, 05 November 2009 13:28
Accounting outsourcing is a relatively new concept in New Zealand which has seen impressive growth as accountancy firms start to realise its benefits.
24/7 Beancounter is one of two accounting outsourcing firms in New Zealand and it has seen huge growth, from three clients in April 2007, to 38 last year and over 110 clients in April 2009.
New Zealand's other outsourcing firm Connect Accounting did not provide client numbers, but says it has seen its number of clients grow by 250% over the last 12 months.
The idea behind outsourcing is to allow qualified accountants to be freed from routine 'bookkeeping' tasks by isolating the account preparation, tax compliance and other routine processes.
This means that outsourcers become the "back office" of accountancy practices and with the routine compliance jobs out of the way, staff members can be used more effectively for better productivity and profitability.
Director of 24/7 Beancounter Denis Woods says although the business has been doing well, he has noticed the impact of the recession.
He believes a lot of accounting firms are finding that people are not buying, selling or expanding businesses.
"This means that the resources that accountancy firms used for those areas are now being used for compliance work which outsourcing would usually deal with."
He says a lot of companies are also delaying bringing in work and not being as prompt as they have been in previous years.
"It will go full circle though and one of two things will happen," he says.
Woods believes if the economy continues to decrease, accounting firms will be over capacity with too many accounting clerks and when people leave, many accounting firms will use outsourcing rather than replacing people.
However, if the economy expands again accountancy firms know they can use outsourcing without having to employ additional staff.
"It's very exciting and it has great potential because businesses are never under or over capacity with outsourcing," he says.
Connect Accounting director Greg Rathbun says it is forward thinking firms that use outsourcing and a lot more happens in Australia where they are more open to it.
"I think when the idea's been around a bit longer and people get more comfortable with it from hearing success stories, it will be more openly embraced."
Connect Accounting uses 30 accountants in India because it is culturally and economically geared up to do outsourcing.
Rathbun says that people generally think of telecommunication companies and banks when it comes to outsourcing, but when he had staff unexpectedly leave his accounting firm Gilligan Sheppard, he decided to create the outsourcing business.
He says Gilligan Sheppard Chartered Accountants has seen fees increase by as much as 22% from using outsourcing.
Woods and the co-founder of 24/7 Beancounter Jody Powell also started off their outsourcing business in India, but it didn't work for them because they wanted accountants with an understanding of the New Zealand culture and New Zealand chartered accountancy firms.
"We thought there must be truckloads of accountants in New Zealand that want flexibility, woman with children and the like, so we did a marketing campaign for contractors and the response was overwhelming," Powell says.
24/7 Beancounter has at least two to three accountants a week apply to be contractors from all around the country.
