How much do you think you would need in turnover to be able to employ an in-house accountancy function? I am not simply referring to having your own bookkeeper, but the whole shebang – hardware, accounting systems, external accountant, space, etc. How does €5,000,000 in turnover sound?
A benchmark for your accountancy function
I did not just pull that number out of thin air! I’ve had many different roles throughout my career, being responsible for accountancy departments, acting as financial director and financial controller for companies, and today I run my own accountancy practice, Beyond. Over the years, I’ve come up with a number that I believe is a reliable benchmark for all companies wanting to know how much they should be spending on their accountancy function. This number is 4%.
You should not be paying more than 4% for your accountancy function; that is, 4% of your total turnover if you’re a service company, or 4% of your total profit if you’re a product company.
Therefore, employing a complete accountancy team would require making at least €5,000,000 in annual turnover. On the other hand, you could employ one accountant, but that will still put you back €50–60,000 a year. A bookkeeper is more affordable, but if you are a growing company this could pose a problem in the long run because their advice may be limited and they can’t offer you the deeper skills that you need.
What’s the solution? Outsource!
It’s time to outsource your accountancy function!
If your company slots into the gap between having a bookkeeper and hiring your own in-house accounting team, then this is where a service provider is a perfect fit. Outsourcing is much more affordable, but this is not just about saving money. Outsourcing core functions is a strategic move for a business that is ready to scale.
Don’t fall for the “I can do everything” trap! When you’re a small company starting off, you tend to do everything yourself, but you can’t do that when you’re at the €2–5 million level. Of course, you’re the best person to do it because you know it all, but delegation is a skill in itself. Many of my clients try to do everything themselves, but little tasks have a habit of distracting you from selling your product. Outsourcing a complete function is a very effective way to get rid of a persistent headache.
Don’t just outsource your accounting…
I support the idea of outsourcing to good service providers so that your core team can focus on growing your business and operations, which will soak up your time. Growing from €1 million to €5–10 million takes huge resources and you can’t do everything yourself. There is no doubt that ignoring your need for business development because you’re too busy micro-managing will impede your business’s growth.
Many non-core functions can be outsourced, such as managed services for IT, content creation for your website, or HR. At Beyond, we even offer an Outsourced CFO service, which works really well for certain businesses.
My challenge to you is to pick two functions that would be best suited to outsourcing and start spending your time more wisely!