The Ultimate Guide to Offshore Accounting
TOA Global
Leading in global outsourced accounting, we help firms increase capacity with cost-effective solutions
Offshoring accounting has become an increasingly popular strategy for firms looking to thrive amidst the talent crisis. As the global economy becomes more interconnected, businesses of all sizes are exploring offshoring as a viable solution to address the challenges of talent shortages, rising operational costs, and the need for specialised skills, but not everyone is sold.
Despite the recent rise in offshoring options, many firms are still wary of the potential pitfalls of handing over your practice to someone outside the country, and honestly, the caution is justified. The term “offshoring” still carries some negative connotations to some parts of the industry, and that is exactly why we want to offer some clarity in this comprehensive guide.
This resource aims to provide a closer look into offshore accounting, covering its benefits, challenges, and best practices to help you make informed decisions and effectively implement offshoring in your practice.
Table of Contents
State of the Accounting Industry
The accounting industry is currently facing a talent crisis, exacerbated by a declining number of accounting graduates, an aging workforce, and the increasing complexity of regulatory environments. Many firms have responded to these challenges by expanding their search beyond local markets to find the talent they need.
Offshoring provides a compelling solution by offering access to a global pool of skilled accounting professionals. Leveraging offshoring solutions allows firms to reduce operational costs, improve service delivery, and enhance overall competitiveness.
Read More: A Decade of Lessons Decoding the Accounting Talent Crisis – TOA Global 2024 Research Report
What Is Offshore Accounting?
Maybe you’ve thought of offshoring your accounting before but weren’t exactly sure of what it entails. To get on the same page, offshoring involves delegating accounting and financial tasks to a team located in a different country, typically one where the cost of labour is significantly lower. TOA Global for one leverages the Philippines as its offshoring destination due to its massive CPA talent pool, and high English proficiency rate.
These offshore teams can handle fundamental accounting functions such as bookkeeping, bank reconciliation, accounts payable, accounts receivable, invoicing, and more. This gives your onshore teams bandwidth to focus on higher-value tasks.
The Benefits of Offshoring Accounting
Now that you’re dialled in on what it means to offshore your accounting, let’s talk about what makes this solution so compelling for many firms. People often have a general idea of the offshoring benefits, but it’s important to be truly cognisant of the value these offshore staff bring.
Cost Savings
Starting with the most obvious, one of the most significant benefits of offshoring is the potential for substantial cost savings. Labour costs in countries like the Philippines are significantly lower than in developed countries, allowing firms to reduce their payroll expenses without compromising on quality.
Yes, you read that right. Just because you’re delegating your services doesn’t mean that the quality should suffer. Many Filipino offshore accountants are trained and experienced in Australian standards.
Offshoring can also help reduce other operating costs, such as office space, utilities, and equipment. By shifting certain functions offshore, your firm can optimise its resource allocation and put these extra resources back into the business.
Access to a Larger Talent Pool
Offshoring opens access to a vast pool of skilled professionals who are well-educated and experienced in accounting and finance. Countries like the Philippines have a strong cultural emphasis on careers that have secured earning potential, such as accountancy, which in turn produces a steady stream of qualified accountants. As of right now, the Philippines has over 200,000 active CPAs and firms can expect more talent to rise.
Offshoring can also provide access to specialised skills and expertise that may be scarce or expensive in the local market. This includes knowledge of international accounting standards, tax regulations, and industry-specific accounting practices.
Increased Flexibility and Scalability
Offshore staffing agencies are often willing to meet accounting firms in the middle. This allows firms to scale their workforce up or down based on their needs. This flexibility is especially valuable for firms dealing with seasonal workload fluctuations or rapid?growth.
By leveraging time zone differences, firms can also achieve round-the-clock operations, improving efficiency and responsiveness. This is especially beneficial for tasks that require quick turnaround times, such as financial reporting and client support.
Enhanced Focus on Core Activities
As mentioned, offshore accounting frees your onshore team to focus on high-value activities like strategic planning, financial analysis, and advisory services. By being able to work on more stimulating tasks, your onshore team also becomes less prone to burnout. With the routine tasks taken care of, they can dedicate more time and resources to tasks they enjoy doing—delivering exceptional service to clients and enhancing client satisfaction and loyalty.
Challenges of Offshoring in Accounting
Seeing the benefits that offshoring accounting provides, how come some firms are still hesitant to buy in? In addition to the negative undertones that offshoring has garnered throughout recent years, there are some legitimate challenges firm owners must look out for.
Communication Barriers
While many offshore destinations have a high proficiency in English, language differences can still pose challenges in communication. Clear and effective communication doesn’t just mean understanding English, it’s about conversing seamlessly without worrying about being misunderstood. This is crucial for ensuring accuracy and efficiency in accounting?processes.
Cultural differences can also impact communication styles, work practices, and expectations. Understanding and bridging these cultural gaps is essential for building strong working relationships with offshore teams.
This is another major reason why Filipino accountants stand out. In addition to holding the 2nd highest IELTS score in Asia and being the 3rd largest English-speaking country in terms of proficiency, Filipinos love their southern mates; so much so that 320,300 Pinoys have chosen Australia to be their second home. This cultural affinity makes daily meetings, conversations, etc.?flawless.
Quality Control and Compliance
Ensuring offshore teams adhere to the same quality standards as local teams can be challenging. Regular training, monitoring, and quality assurance measures are necessary to maintain consistency.
Offshoring accounting functions requires a thorough understanding of international compliance regulations. Firms must ensure that their offshore teams are well-versed in relevant laws and standards to avoid legal and financial risks.
Make sure your offshoring partner adheres to the following standards:
Data Security and Privacy
Data security and privacy are paramount when it comes to accounting. You must partner with a firm that not only implements robust security measures but also cares about protecting their client information and complying with data protection regulations such as SOC 2 compliance.
Management and Oversight
Managing remote teams requires different skills and approaches compared to managing onshore staff. Effective remote management includes having regular check-ins, designating an “onshore champion,” and fostering a collaborative work environment that treats your offshore team as if they’re working in the office.
Integrating offshore teams into the overall business operations can be complex. Clear processes, defined roles, and effective coordination are necessary to ensure seamless collaboration between onshore and offshore teams.
Best Practices for Offshoring Accounting
Now that you understand the advantages and challenges of offshore accounting, let’s explore the best offshore practices to avoid potential stumbling blocks.
1. Choose the Right Offshore Partner
Select an offshore partner with a proven track record and extensive experience in the accounting industry. Look for testimonials, case studies, and references to gauge their reliability and expertise.
Ensure the offshore partner’s culture aligns with your firm’s values and work practices. A strong cultural fit can facilitate harmonious collaboration and better outcomes.
TOA Global has proven to deliver real-world results by helping 1,100+ firms across the U.S., Australia, and New Zealand. Our Australian-trained offshore accountants have the experience and expertise to help your firm deliver high-quality results.
2. Clear Communication and Expectations
Provide detailed documentation of processes, standards, and expectations to ensure clarity and consistency. This includes standard operating procedures (SOPs), templates, and guidelines.
Schedule regular check-ins and meetings to discuss progress, address issues, and provide feedback. This helps maintain alignment and fosters a sense of teamwork.
3. Robust Training and Development
Invest in comprehensive training programs for offshore teams to familiarise them with your firm’s systems, processes, and standards. This sets a strong foundation for their performance.
Provide ongoing training and development opportunities to keep offshore teams updated on industry trends, regulatory changes, and best practices. Continuous learning enhances their skills and performance.
When you work with TOA Global, you can ensure your offshore accountants’ continuous improvement under Ab2 Accounting Institute’s award-winning learning library. The courses cover a wide range of topics, from accounting and bookkeeping to leadership and management.
4. Effective Management and Oversight
Assign dedicated managers or team leaders to oversee offshore operations. These individuals act as a bridge between onshore and offshore teams, ensuring effective coordination and communication.
Establish clear performance metrics and key performance indicators (KPIs) to monitor the performance of offshore teams. Regularly review these metrics to identify areas for improvement and recognise achievements.
5. Data Security and Compliance
Choose an offshoring partner with a robust IT infrastructure and security protocols to protect sensitive data. This includes encryption, firewalls, access controls, and regular security audits.
Develop a compliance framework that outlines the regulatory requirements and best practices for data protection. Ensure that offshore teams are trained in these requirements and adhere to them.
6. Build Strong Relationships
Treat your offshore team as your own. They’re more than the extra help — they’re an extension of your firm. Foster a sense of belonging and inclusion by integrating offshore teams into the broader organisational culture.
Despite the remote nature, encourage collaboration, knowledge sharing, and social interactions. You can do this by hosting virtual events and engagements.
Give the credit where it’s due and reward the contributions of offshore team members. Providing incentives and acknowledging their achievements help boost morale and motivation.
Common Offshoring Services
Offshore accountants can cover a wide range of accounting functions. Here are some key accounting services that you can delegate to your offshore team.
Bookkeeping – Bookkeeping services are at the core offerings for most firms. Offshore bookkeeping can significantly reduce operational costs while maintaining high accuracy and efficiency. Offshore bookkeeping services often include:
Payroll Processing – Offshoring payroll processing can help firms handle complex payroll tasks more efficiently and ensure timely and accurate employee payments while complying with tax regulations. Offshore accountants can take care of the?following:
Accounts Payable and Receivable – Instead of worrying about AP and chasing AR, focus on high-level tasks that need your attention. Offshore teams can efficiently handle invoicing payments, and collections, ensuring smooth financial operations.
Financial Reporting – Offshore accountants can prepare detailed financial statements and analyses, providing valuable insights into the firm’s financial health. Your offshore team can take care of:
Tax Preparation and Compliance – Offshore tax preparation and compliance services can help firms navigate complex tax regulations and ensure accurate and timely filings. Offshore tax experts can assist with:
Audit Support – Your offshore auditors can help prepare for internal and external audits more effectively by:
Management Accounting – Offshoring management accounting tasks provides firms with in-depth financial analysis and insights that support strategic decision-making. Your offshore team can handle:
Bridging the Talent Gap with TOA Global’s Offshore Accounting Services
Offshoring accounting functions provides tangible benefits for firms looking to enhance their service delivery. However, there’s also a right way to do it and it requires careful consideration and tactical planning. By understanding the intricacies of offshore accounting and implementing best practices, firms can navigate these challenges and unlock the full potential of offshoring.
If you’re ready to explore your offshoring options, partner with TOA Global. Our elite offshore accountants are ready to add value to your firm, schedule a call today! For more information on the state of the accounting talent crisis, download our 2024 research?report.