Can you tell me what QX does, and a small rundown of the history of the business?
P: QX Global Group is a leading provider of business process management services or outsourcing, as we call it. We are based out of the UK with offices in the USA, Canada, Australia and India. QX Accounting Services (QXAS) is the accounting outsourcing arm of QX Global Group.
Over the years, we’ve helped over 400+ accounting firms grow and thrive in the UK. Throughout this time, we’ve helped many accountants unlock their business value by improving processes, combatting the staffing shortage and helping them adopt new platforms.
We also work with payroll bureaus and umbrella businesses to help with their staffing and workload management.
Can you tell me a bit more about the recent report?
R: We chose to do a report on payroll outsourcing because payroll services rose to massive prominence in 2021. This was in part due to the introduction of the furlough scheme, and the constant iterations to it – I think there were around 300 iterations – and because of all the tricky business involved in payroll last year, payroll became both a boon and a curse for accountants. There was so much demand for the service, but the specialisation required to process it, the specialists and the staff members and the kind of time and the investment required to process payroll last year – it was just burning a hole in the pockets of these accountants who were already struggling with WFH and running their practices from home..
Even payroll bureaus and payroll professionals who are trained to deal with constant variations in payroll were finding it difficult to cope and adapt with the changes. And they were left with no spare resource.
So in 2021, when the Coronavirus numbers finally subsided in Britain, we decided to survey accountants who regularly outsourced their payroll during WFH. Our aim was to gauge whether there were any benefits of outsourcing their payroll during this period of working from home or not. We wanted to record the best practices that these accounting firms, who thrived through the pandemic, employed to keep growing their practice through WFH. It essentially boiled down to the 10 best practices that made these firms successful, and how they will help practices succeed in 2021.
What were the standout findings, and why do you think they were possibly more important than others?
R: There were a total of 10 best practices, divided into sections that talk about profit, the time saved and the costs saved, before going into outsourcing in general.
I think the part about profits stood out the most, because we found that a little over three-quarters of accountants surveyed (81%) improved their profit margins by at least 5% and up to 40% in the last six months. That was a significant amount of improvement, especially when you’re working from home, as this comes at a time when a lot of these practices were struggling to keep their heads above the water. They had tight cash flows, their clients may have been struggling, and many were running their practices from home, so there was this immense need to hire specialised payroll resources.
A lot of them were also wasting hours and salaries of senior resources on doing payroll processing because of the tricky nature of the furlough calculations. So it was quite exciting to see that the firms that ended up outsourcing their payroll improved their profit margins by at least 5%, and up to 40%.
Another major finding was that 50% of these 81% accountants who saw such a giant spike in their profit margins, invested most of their profits from payroll outsourcing into improving their practice’s processes further. We’re assuming that this was possibly in an effort to strengthen their practice management during working from home. Similarly, 37% of these 81% of accountants who earned a lot of profit from payroll outsourcing invested their profits into upskilling team members.
In the end, it was interesting to see that the effective outsourcing of payroll, which is such a low-margin, time-consuming function, provided the capital and the time that these accountants needed to strengthen two of the most important pillars of their practice, which is people and processes.
How can firms take advantage of these findings?
P: The purpose of these findings was to give valuable insights to practices on how they look at outsourcing. The report is split into two parts. The first half talks about the results of outsourcing, but the next half talks about how the best practices were being employed through outsourcing in general. We always recommend that these practices review their strategy each year, and identify what’s actually worked for them best and what’s actually stopping their growth. This report will actually help them paint a clear roadmap of how they want to grow their practice.
Once they’ve made these decisions, the journey just becomes easier, all they need to do is to give us a call for a no-obligation free consultation. We then guide them step by step on what they should do right, and get into the world of outsourcing, which has so much to offer – right from smaller practices to larger practices.
I have consulted a lot of accountants over the years and the strategy that has worked really well for them is they always start small. Start learning and exploring the option of outsourcing and once they have the confidence, once they understand and know the benefits they are getting out of this model, that’s when they take a deep dive into the world of outsourcing and make the most of it.
Can firms that already outsource payroll also learn from this?
P; Oh, absolutely. As I mentioned earlier, it’s the mindset and way people view outsourcing that has completely changed. It’s not just about saving costs. People understand that saving costs is a by-product of outsourcing. What you get out of it is more time that you can spend with your clients, and with advisory services, consulting them, advising them, guiding them with what to do. At the same time, it frees up time to upskill staff members, improving current processes, making them more agile and more efficient.
What has the reaction been to the report so far?
P: It has been quite unanimous. Everybody has found it very insightful and helpful for planning their next move towards growing their practice with outsourcing. It really helped firms that were curious to know about outsourcing – who wanted to step in, but said they were not sure how to get started.
We advised them to get on a call with us and that we’d be more than happy to provide them that free consultation call and give them that guidance. So it doesn’t matter whether they’re going to take up a service or not. It’s about giving them that guidance and showing them the path and whether this particular model is going to work for them, for their size of practice. This particular report has allowed them to talk more about outsourcing and also take those next decisions, take those next steps and explore the option altogether.
Do you have any plans for any further reports?
R: So in 2019, we produced a report titled ‘The really bad news for accountants and what to do about it’. It was a research report on the state of the accounting industry in 2019. We partnered with Steve Pipe, who is an industry speaker for that particular research campaign, and the results were shocking. It showed how much accountancy has changed from the time that Steve was a part of the practice to then in 2019. So similarly, a lot has changed between 2019 to 2021.
The whole industry went through these seismic changes, and years of technological evolution was crammed into this one single year. So definitely this year, we want to carry out a second edition of the ‘state of accounting’ report.
Apart from this, we’ve also seen a demand for more accountants wanting to know what the best practices to lead their practice into 2021 are. We may end up coming up with more ‘Trading Strategies’ reports, about different instruments so that governments can learn and grow from what successful growing firms have already done right.
We’re also using these reports, and the popularity of these reports, to support some of our social causes. QX is a partner with B1G1, a Singaporean charity, and we’ve teamed up with a mission called ‘Outsourcing For Good’. On the behalf of the people who download the report or take part, we donate all the proceeds on their behalf going towards Covid-19 funds in India to help the underprivileged elderly seeking medical treatment, and to help children who’ve been orphaned during the second wave of the deadly virus.
Every time someone downloads the report, they aren’t just helping their practice. They’re actually helping, knowingly or unknowingly, people across the globe deal with the Covid-19 crisis. What better way is there to improve your practice than to also impact people who really need your help across the globe?
Download the research report here