Virtual Accounting Vs. In-House Team: What's Right for Your Business? [PART 2]

March 18, 2024 Theresa Rex

virtual accounting team of one

Talent Showdown: Virtual Accounting Versus Staffing vs. In-House Teams

virtual accountant working remotely

In Part 1, of our blog series, we covered the basics of virtual accounting Vs in-house Vs staffing. But when hiring accountants, it's helpful to look at all of this in context. So let's use these talent frameworks to extrapolate a typical outcome for the hiring process, candidate journey and long-term result for each.

For the purpose of this exercise to learn more about virtual accounting vs in-house teams, let's look at one of the country's most competitive markets for accounting: Houston. Let's also presume that our hypothetical organization is looking for a General Ledger Accountant, a role that has lived near the top of yearly "Most In-Demand Accounting Jobs" for some time now.

Hiring for In-House Accounting Teams

cfo hiring in-house accountant

For leaders hoping to expand their in-house teams or to learn more about virtual accounting vs in-house, relief for the talent squeeze may be on the horizon. But that relief comes with a pretty big caveat. As Gen Z enters the workforce, they're bringing the potential to refill the accounting talent pipeline with them. They're more pragmatic than Millennials and value job security as highly as the prior generation values fulfillment. That's why it's unsurprising that recent research has found an uptick in undergrad interest in accounting as a major and chosen profession, and experts predict they'll stay at a company longer than Millennials might have.

Here's the caveat: the high value on job security comes coupled with prioritizing salary and benefits, and while they're pragmatic, they're hardly apathetic. Zoomers also want to make a meaningful impact at work, either within their organization or to the community at large.

What this means for leaders favoring in-house vs. staffing accounting candidates is that they will need to offer competitive compensatory packages and opportunities for advancement to reduce turnover in the long-term.

  • Scenario 1: Hiring In-House With Zack, a Gen Z General Ledger Accountant

    With all of this in mind, let's meet a typical candidate for an in-house general ledger accountant position: Zack.

    Zack graduated with a Bachelor of Business Administration through the University of Texas at Austin three years ago, and even though his internship at a local insurance company led to an entry-level general accounting position, he didn't feel he was progressing fast enough.

    You're hiring for a general ledger accountant, and Zack is an excellent fit for the job – his skills are solid and he's asking for a salary that's at the upper end of your budgeted range, but average for his experience range in Houston's market, which is about four percent higher than the national average of $50,462.

    You decide to hire him, and he settles in quickly, exceeds your expectations and turns out to be a great fit for your team. As he approaches his first work anniversary, you conduct his annual performance review, and he is approved for a three percent cost of living raise. Zack discusses his career objectives with you. He sees himself moving into an analyst role within the next few years, and the two of you set some objective and key results (OKRs) that will help move him in that direction.

    Toward the end of his second year, he confides that the cost-of-living raise isn't putting much of a dent in his student loans and puts together a compelling case for a higher salary increase and asks you to consider it before this year's review. You put in a request for a budget revision that includes the increase, and while everyone agrees that Zack does a wonderful job, his request has to be tabled indefinitely – his role is important, but not growth-driven.

    After some back-and-forth, you're able to secure a concession: a small performance bonus in addition to the usual cost-of-living raise. Zack is disappointed but agrees to stay on in the hopes that he'll move into a growth-driven role soon that will offer the compensation increase he feels he deserves.

    Throughout his third year, Zack still performs well, but begins to disengage. Shortly after-tax season wraps, he pulls you aside to tell you that he's been offered a financial analyst role with a competitive pay and benefits package across town and has decided to take it. You're disappointed but not surprised, wish him well, and start drafting the job description for his role and consider how to divvy up his workload among his teammates in two weeks' time.

The Accounting Staffing 'Hiring' Process in Practice

2 finance leaders comparing virtual accounting to in-house teams

You aren't having a lot of luck finding a replacement for Zack, and the finance department is starting to feel the effects of taking his workload on for the past few months. You need to do something to alleviate the crunch-time they're putting in. You'll need to do it fast, too, or you'll soon be looking for more than just Zack's replacement. After talking it over with senior leadership, they give you the green light to enlist the help of an accounting staffing firm.

  • Scenario 2: Meet 'Alice', an Example of Hiring Using Accounting Staffing

    You're pleased with how quickly the accounting staffing agency is able to set up a qualified replacement for Zack. Soon, you're signing off on a contract that introduces you to Alice, the much-needed general ledger accountant the agency employs. You're relieved that you don't have to deal with the red tape of setting up insurance, tax withholdings, health benefits or tuition reimbursement – the staffing firm is handling all of it. Plus, instead of a salary, Alice will receive hourly pay, which is right in your budget's "sweet spot".

    Like Zack, she has an accounting-focused Bachelor’s degree, but you don't recognize the university. That's partly because Alice recently moved to the area. To make settling into Houston easier, she has agreed to work with a local staffing agency, but she's candid about the fact that she's hoping to find a permanent position soon. She also tells you that she's happy staying at the general ledger accounting level. She likes accounting but has other interests outside of work and likes the consistent hours and pay. All of this is really good news, and you can see a path to bringing Alice on permanently once your existing contract with the accounting staffing firm is fulfilled.

    Alice is a diligent worker, but, as promised, she clocks out each day at precisely 5:00 p.m. whether the day's tasks have been crossed off or not. This is a schedule determined by the accounting staffing firm. For the most part, the team likes her, too, and they're relieved to finally be able to focus on their own workloads again. There's some friction, but fortunately, your organization has some team-building activities planned that are always popular with the staff – a company outing to a local movie theater followed by an accounting department happy hour.

    Unfortunately for you, Alice and the rest of the team, you can't actually invite her, because she's not your employee. The staffing agency informs you that Alice will either need to remain in the office during the outing or enjoy a day off – without pay. It's a liability issue. That's not the only surprise, either. It turns out that the hourly rate you signed off on doesn't include something called an "overhead multiplier" – the cost of Alice's employee burden hasn't been shouldered by the agency after all. It's been passed on to you.

    After the team's outing, things start to deteriorate quickly: Alice can't help but feel some resentment at being left out and for her upcoming lowered paycheck even if she understands why she wasn't included. She still does the work she was placed to do, but it often comes in a little late or lackluster, which increases the friction your team was already feeling.

    After about five months of this, it's clear that you can't invite Alice to stay past the end of the contract, but that ends up not mattering anyway – one day she simply doesn't come in. When you call the accounting staffing firm to see if she called out, they inform you that Alice emailed her resignation earlier in the day. She was able to find the permanent position she wanted somewhere else, and her at-will employment status means she wasn't obligated to provide notice.

    They offer to send you a replacement with a new contract, but you aren't willing to sign up for another year with this particular firm. Because of that, all you can expect from the firm is a partial pro-rata refund that won't even cover the cost of recruiting yet again for your general ledger accountant role.

The Virtual Accounting Talent Solution vs. the Rest

ceo working with a virtual accounting solution provider

After all of this, it's pretty understandable if you're less than enthusiastic at the prospect of heading back to square one again with either hiring option, despite the strengths of each. What you're looking for is someone with education, skills and dedication comparable to Zack's. You also need to be able to fill the position as quickly as possible and avoid the additional costs and headaches of employee burden costs, like you were able to at the outset of Alice's short stint with the company. You just want to avoid the drawbacks of each model: you want to be able to finally staunch turnover and contain costs without sacrificing the quality of work. Virtual accounting support is very likely the missing piece you need.

  • Scenario 3: Adding Philippines-based Victoria to the Team

    Recently, a large portion of your Texas-based organization has been working from home, part of a decision by leadership to decrease the company's real estate footprint and operational overhead. Some team members have even moved out of state to take advantage of lower cost-of-living expenses and it's gone really well – everyone attends core hours no matter what time zone they're in, and there's even been an increase in overall productivity.

    Because of this, senior leadership gives you the go-ahead to look outside of the local talent pool for a general ledger accountant. As you research the logistics of this, you come across the website of a virtual accounting support provider. The pricing structure they provide is very attractive – about 50 percent of the costs associated with an in-house resource like Zack and almost 75 percent of what you would spend filling the role with a staffing agency placement like Alice.

    The provider promises thorough onboarding and, after listening to you describe your lackluster experience with the agency, sends you information about their employee engagement and professional development initiatives. They align well with yours, and positive reviews left by the provider's employees across platforms like Comparably serve as confirmation.

    There's one hurdle to clear, though. The talent the provider employs is overseas, in Manila. You worry that something will be "lost in translation", whether it's because of a language barrier or at the education or certification level. The provider assures you that it won't but offers to run a pilot program for you before you sign a longer contract so you can see for yourself.

    Your leadership team signs off on the pilot program, and after a rigorous onboarding process that included a thorough documentation of your organization's general ledger accounting processes (you've been meaning to do that) performed by the provider-side transition team, you begin working with Victoria.

    Victoria attended the University of The Philippines, which you learn is one of the country's most prestigious, where she earned her Bachelor of Science in Accounting while playing women's basketball as the "Fighting Maroons" point guard. Afterward, she took an internship as an accounting clerk at the Manila-based satellite office of a well-known multinational corporation. She logs on at the same time your team does, and everyone is friendly on Zoom and Slack, especially on the annual March Madness channel.

    Victoria functions as an extension of your own team, despite never working onsite. She speaks fluent English and Tagalog and knows GAAP inside out. Her direct supervisor is Carl, a CPA with Big Four experience and a Six Sigma Green Belt. Between the two of them and your own team, they find a way to reduce account reconciliations times by 10 percent and update your process documentation immediately to reflect the improvement.

    By the time the pilot program is over, senior leadership is so happy with the results that they approve the addition of a tax specialist to the virtual accounting support solution contract – a role whose duties everyone on your team has traditionally split evenly. As a result, your team has more time to focus on data-driven initiatives and are more productive overall. Should Victoria leave or move up into a leadership position, it will be within the provider's organization, and because documentation has been so rigorous, her replacement take over with no interruptions and without having to change your contract.

Read the final Part 3 of the blog series about virtual accounting vs in-house teams to find out which scenario yields the best reward.

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