As your accounting practice transitions toward using outsourcing services to increase capacity and profits, which engagement model suits your requirements? Should you move toward a Full-time Equivalent (FTE) model, a Block of Hours model, or an Ad-hoc model?
To find out, we spoke to Dishant Desai, Global CEO of QXAS. He is an FCCA and Xero certified accountant with experience in practice. He has been involved in the UK accountancy sector since 2003 and has over 10 years of experience providing outsourced accounting and bookkeeping services to 275+ UK accountancy practices from our four offices in India.
Here are some excerpts from our Q&A with Dishant.
Q. What are the advantages/disadvantages of the FTE model vs Ad-hoc model vs Block of Hours model?
A. Dishant: All three models use the same infrastructure for us to complete the work. Either we remotely
Block of Hours
The Block of Hours Model is the most popular
The only drawback of this model is that hours elapse if you don’t use them within the agreed period of time.
A full-time employee (FTE) is when you hire a dedicated bookkeeper or accountant with an overseas provider at a fixed fee per month. It is our second most popular model, after Block-of-Hours. From a resourcing perspective, I recommend this model the most.
This is because talent needs are shifting in the accounting industry with the arrival of cloud accounting. Take
The only way to respond to this change is by training and upskilling existing staff. But you can’t ignore the compliance work as it is the foundation of any small to medium accountancy practice. So what do you do? Should you cultivate the talent you will need five years from now, or continue to keep existing staff tied up in compliance work as that needs to be delivered too?
This is where the FTE model comes in– it supports your core group of staff in the UK by completely taking over the lower-level tasks like accounting, bookkeeping, payroll
The good thing about the FTE model is that it removes the hassle of recruiting and retaining staff. Turnaround time is generally better than you can deliver in your practice yourself, plus there is this added advantage of it being up to 50% cheaper than hiring an accountant in the UK.
The only downside is that if you don’t have
The Ad-hoc outsourcing model is also popular amongst UK accountants and bookkeepers. You basically use the services on a pay-as-you-go basis and pay only for the number of hours you use. It is a great model if you have short-term workflow issues, meaning you have too much work but not enough staff. If can also be good if you have an immediate need to get work turned around, especially for seasonal times such as the busy season.
Most of my clients use this model to
Having said that, though, the ad-hoc model is often used by our clients when they are first starting out, but as their practice grows they generally move to the dedicated full-time employee (FTE) or Block-of-Hours model.
Q. Is the FTE or Block-of-Hours model the future of Accounting or the Ad-hoc model?
The second factor
Outsourcing of compliance work is driving efficiencies that
Q. What kinds of accountancy practices should consider either of the outsourcing models?
A. Dishant: I think all ambitious accountants should consider either the Block-of-hours or the FTE model. I think there’s a misconception that you should use outsourcing when you have seasonal requirements. On the contrary, you should look at augmenting your in-house staff with outsourced staff. Technology is going to play an even bigger role in the years to come. I ask you to ask yourselves: Is your current technology portfolio up to the job? If not, what are the gaps?
I think the best thing is to
With the accounting industry facing big changes on almost every front, it’s difficult to imagine your practice being successful over the long-term without you making fundamental changes to the way you operate. Hiring Full-time Equivalents (FTE) in offshore locations as an extension of your team will likely play a big role in facing those challenges.
Get a top quality service for either model
Regardless of which offshore bookkeeping/accounting service model you choose, QXAS can help you scale your teams, reduce costs and increase practice profitability. If you want to know more about how our engagement models can be put to work in your accountancy practice, book your 1-2-1 consultation or sign-up for a free trial.