Hiring skilled local talent is hard. You have access to a limited number of people. And often, you’re competing with firms who can pay more than you can afford.
There’s a solution that might solve this predicament: offshore staffing.
Many have associated offshore accounting with cost savings, access to a global talent pool, etc.
That being said, if you want a more in-depth look, this guide might be just what you need.
Without further ado, let’s go!
Table of Contents
- What is Offshore Accounting
- Benefits of Offshore Accounting
- Services Included in Offshore Accounting
- Offshore Accounting Best Practices and Strategies
What is Offshore Accounting?
Offshore accounting is the practice of firm owners or accounting departments hiring team members in another country.
These accountants provide the usual services you get from a local accountant, which include bookkeeping, payroll services, tax preparation, auditing, etc.
I’m a big believer and advocate of offshoring. This approach is reflected in the composition of the entire Future Firm team — we’re proudly 100% offshore.
Here’s a recent picture of us in Bali during our first team retreat.
On a side note, offshoring shouldn’t be confused with outsourcing. If you want to find out about the latter, check out this blog post.
Benefits of Offshore Accounting
To be honest, I never offshored while I ran my firm. However, I think offshoring has changed dramatically for the better over the years.
In fact, offshoring and outsourcing is one of the hottest topics in my Future Firm Accelerate community:
With that said, here are some of the reasons why offshoring may be a viable option for your firm:
1. Cost-Effective
Offshoring offers cost advantages over local hiring, making it a popular choice for many firm owners.
Some outsourcing companies boast savings of up to 70% on operational expenses such as salaries, equipment, and utilities.
2. Access to a Global Talent Pool
Offshoring expands the hiring pool, which makes the hiring process easier for most accounting firms.
You can gain access to a broader range of candidates, offering benefits such as specialized expertise and increased adaptability to your firm’s work culture.
3. Asynchronous Operations
Offshoring enables asynchronous work, which means accounting tasks can be completed at different times without requiring real-time coordination.
This approach reduces the necessity for frequent calls, meetings, and immediate collaboration.
4. More Time and Focus on Other Processes
Offshoring frees you from routine accounting functions, allowing you to focus on strategic processes often overlooked.
You’ll have more opportunities to focus on growth, process improvement, resource optimization, client acquisition, financial planning, continuous learning, and impactful big-picture initiatives.
5. Scalability
When you go offshore, it enables you to have flexible team scaling. This approach ensures access to accounting professionals when needed and reduces costs during slower periods.
Additionally, it streamlines recruitment processes and minimizes administrative burdens associated with local hiring.
Services Included in Offshore Accounting
Offshore accountants can handle different types of services. Listed below are some main accounting processes you can offshore:
Tax Preparation
One of the fears firm owners would have is: If my team is based in XYZ country, how are they going to be familiar with our tax code?
Fortunately, offshore accountants often receive specialized training to understand the ins and outs of international tax codes.
Key components of offshoring tax preparation include:
- Tax planning
- Tax compliance
- Income tax return preparation
- VAT and GST compliance
- Electronic filing
- Tax deduction analysis
Bookkeeping
Many firm owners choose to offshore bookkeeping tasks, especially if they’re looking to save money or get someone who has niche skills while focusing on other processes that need more attention.
Offshore bookkeeping services include, but are not limited to:
- Data entry
- Reconciliations
- Financial reporting
- Other routine accounting processes
Payroll Processing
This involves outsourcing tasks related to payroll management.
Here’s a list of tasks that offshore accountants usually handle:
- Payment disbursement
- Data collection
- Salary calculations
- Tax compliance
- Reporting and documentation
Accounts Receivable and Payable
Accounts receivable (AR) represents the money owed to your firm by clients. On the other hand, accounts payable (AP) is the money your business owes to sellers or vendors.
Below are some of the primary AR/AP processes you can leave to your offshore accounting staff:
- Invoicing and billing
- Payment processing
- Collections
- Reconciliation
- Payment disbursement
- Expense report
- Invoice processing
Financial Statements Preparation
You can offshore the creation and management of a company’s financial statements. Offshoring financial statements preparation includes:
- Transaction recording
- Adjustments and reconciliation
- Preparation of income statements and balance sheets
- Data collection
- Cash flow analysis
- Compliance with accounting standards
7 Offshore Accounting Best Practices and Strategies
While offshoring is not an overly complex approach, challenges such as cultural differences, quality control, and security concerns could impact its effectiveness.
To get the best out of offshore accounting, I highly recommend implementing some of the strategies below.
Strategy 1: Hire The Best Talent You Can Afford
A bit of backstory.
When I was running my own firm, getting the right people for the job was my top challenge.
As I mentioned earlier, I never offshored during my firm owner days. Now, my team is global, with the majority being from the Philippines.
If you’re looking for candidates in the Philippines, I recommend checking out Onlinejobs.ph.
At Future Firm, the majority of our team members were recruited from this platform. The site arguably has the largest database of Filipino offshore workers.
Don’t get me wrong, I’m not only suggesting one country when you’re looking for talent. If an applicant is worthy, I’m always going to be interested, wherever they may be.
According to Indeed, the average cost for a Philippines-based offshore accountant is just over $1,000 USD per month.
But to attract the best applicants, you probably have to offer more than that. Don’t make it just about the salary.
While it might incur a slightly higher cost, the returns in terms of quality and productivity often far outweigh the initial investment.
The key to the whole offshoring approach is hiring the best talent with the right attitude. If you manage to nail this part, all the practices and strategies below will be easier to implement.
Strategy 2: Implement Multiple Communication Channels
Most likely, you’ll be working with people from different cultures and time zones. I can’t stress enough that having effective communication is the linchpin for success when it comes to offshoring.
In an environment where diverse perspectives and experiences converge, effective communication becomes the glue that binds the team together.
The current communications technology makes it possible to have less in-person interaction but still maintain a high level of quality and productivity.
Here’s how we chat in our company, and as you may have noticed, it’s not all about just work stuff. 🙂
With that, consider these apps to help you stay in-sync with your offshore team:
- Video calls: I use Zoom for my weekly team meetings. Google Meet is a good alternative.
- Email: Gmail and Outlook have most of the features you need in an email service.
- Practice management: Check out this compilation to find out the best options.
- Instant messaging: Me and my team use Missive to chat and email. Slack is also a viable choice.
- Recording: Loom is a great tool to provide instructions asynchronously. It can help you cut your meetings in half.
Strategy 3: Apply Comprehensive Security Measures
Data security is one of the main concerns of those in the accounting industry who are skeptical about offshoring. Clients may also not be very welcoming about the idea of your firm employing accountants from different parts of the world.
To address these concerns, it’s crucial to put in place strong security measures.
This involves using encryption, secure data transfer methods, and strict access controls to make sure sensitive information stays protected.
Here’s a couple of suggestions to protect your sensitive data better:
- Use encrypted communication channels, such as VPNs like TunnelBear.
- Provide regular training sessions and exercises for employees on data security best practices.
- Implement strict access controls, limiting access to sensitive data based on job roles.
- Incorporate third-party backup services.
- Prioritize secure file transfer methods, such as Secure File Transfer Protocol (SFTP) or secure cloud storage solutions.
Strategy 4: Respect Cultural Differences
While this tip may not be related to any specific accounting process, it could go a long way in terms of team morale, retention, and overall collaboration.
Embracing and respecting cultural differences within the team creates a more inclusive and harmonious work environment.
For instance, I found that people in the Philippines are generally more reserved. They are not keen on turning on their cameras during team meetings.
Despite my personal preferences, I don’t force it.
Why?
It’s not just your offshore team fitting into your firm’s culture, it’s also about you fitting into theirs.
Once you understand these cultural nuances, communication becomes smoother, and a better understanding of each other naturally follows.
Strategy 5: Avoid Micro-Managing Across Time Zones
No one likes getting micro-managed, regardless of the business setup. In an offshore environment, it’s easy for firm owners to micro-manage, specifically on the work schedule.
My advice? Don’t.
Try to work as asynchronously as possible. Consider the preferences and well-being of your offshore team, recognizing that their working hours may not align with your own.
Check out this post from one of my members about why she’s not making a big deal about working with others in different time zones:
Overall, strive to establish a collaborative and flexible work environment that respects diverse schedules, allowing your team to maintain a healthy work-life balance.
Strategy 6: Focus on Results, Not Timesheets
My Future Firm team doesn’t fill out timesheets. Instead, we are emphasizing deliverables, work quality, and meeting deadlines with capacity planning.
In this podcast episode, I discuss how capacity planning can help achieve the work-life balance you and your team want.
This practice was well-received by my team members, who were tired of the traditional time-tracking model.
Strategy 7: Consider A Local Manager
If you’re going to fully embrace offshore operations in a specific country, I highly suggest you also hire a local manager.
Having one can play a crucial role in navigating cultural nuances and bridging gaps.
For instance, my Director of Operations is from the Philippines, and her invaluable presence helps address cultural nuances that I might miss.
When I had an operations manager in the US overseeing the Filipino team, this individual struggled to grasp the intricacies of the local work culture and communication styles, leading to misunderstandings and a noticeable disconnect within the team.
Ready to Offshore Your Operations?
The cost-effectiveness, access to global talent, and time savings are just a few of the reasons why offshore accounting is such a life-saver for many.
What about you?
Which of the benefits stood out the most to you?
Do you have any reservations about offshoring?
Leave a comment below, and share your thoughts. 🙂
