To outsource or not to outsource…
That is the question on many business owners minds. It is particularly dominant in the Australian Real Estate industry as we experience high volumes of growth. In our current market conditions we find it difficult to handle certain aspects of the business.
Outsourcing is when a company will hire an external provider to subcontract certain services. It is different from ‘Off-shoring’ where companies engage the services of overseas providers, typically Asia & India. Common areas of outsourcing are:
- Administration
- Marketing & Design
- Social Media Management
- IT Services
- Accounting
- Human Resources
Most business owners will look to outsourcing to alleviate a weakness in the day to day running of the business. This helps to save on time and money. One of the common misconceptions is that you have to look abroad for cheap labour and local outsourcing within Australia is expensive. However, it is not! There are many reasons why certain tasks should remain local, especially in Real Estate.
It’s important that you know what outsourcing can offer your business. Understand the benefits a Real Estate office can experience from outsourcing, particularly their trust accounting. We’ll discuss some of the reasons outsourcing is the solution to managing the performance of your business.
Some of the issues within a Real Estate office may include
- In house trust accounting is being performed by one sole person. This person may suddenly become ill or just decides to up and leave. They don’t provide a proper handover and leave everyone unsure of what to do or whether certain tasks are up to date.
- Staff have limited knowledge & experience of trust accounting & legislative requirements.
- Staff feel pressured by taking on trust accounting duties on top of their existing roles. They feel that fatal mistakes could be made within the trust account.This can put their own job at risk but more significantly, expose the office to high risk.
As a licensee or officer in control it is imperative that staff have adequate training when performing trust accounting duties. If not, it may significantly impact the outcome of your annual audit or result in regulatory body fines.
There are 5 main reasons why Real Estate agencies should look to outsourcing their trust accounting. Particularly since this is how we retain clients and the method with which we are paid for our services provided.
- Reduced staff & recruitment costs
- Spread the risk
- Expertise
- Stability & consistency
- Increase business growth
Reduced staff & recruitment costs
Outsourcing provides a more financially viable option than hiring full time staff. You avoid paying wages, leave loading, workers compensation, sick leave & other entitlements. GST on services is claimable through your BAS reporting and services are also a deductible business expense. Recruitment costs are also reduced as staff turnover is minimal.
Spread the risk
Your shift the risk to a third party provider and mitigate the risk of significant loss. Your provider should be equipped with public liability & professional indemnity insurance and will generally have their own risk management policies in place for providing consistent services.
Expertise
Third party trust accounting providers are specialists in their field and focus on no other task than service they provide. Higher quality input equals better output for your client. Providers should be Real Estate professionals themselves with minimum of 10 years experience and have an in depth knowledge of legislation & trust accounting compliance.
Stability & consistency
Continuity is important in Real Estate. Your clients are not interested in your internal staffing issues. They just want to be paid and receive the correct monthly reporting. With a third party trust account provider, there are no staff walk outs, leaving you in the lurch, not knowing what is going on. There is also no induction process between each handover as services remain the same throughout the entire process.
Increase business growth
Outsourcing your trust accounting allows you to focus on your core income-producing activities without sacrificing the quality of service. One of the major reasons Real Estate businesses are held back from business growth is because they’re too busy getting caught up in the administration and maintenance of daily trust accounting activities.
What are some of the challenges you face with your internal trust accounting processes? Do you find it difficult to grow your portfolio because the administration and trust accounting have you chained to the desk? As a result, how do you mitigate risk within your organisation?
If you want to know more about the trust accounting services my company provides or have any trust related questions please don’t hesitate to get in touch: jane@endofmonthangels.com.au
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~ Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 18 years industry experience. Don’t trust just anyone with your trust accounting. Trust End of Month Angels and get back to what you do best – growing your business.