Offshoring involves assigning business tasks to a dedicated team from another country, usually to leverage cost advantages. While it is interchangeably used to refer to outsourcing, the two are not the same. Outsourcing is the hiring of a third-party service provider to complete a company’s internal operations while offshoring is a geographical activity that shifts a business process to a location abroad.
Offshoring has become a viable option for companies because of its benefits such as reduced labor costs, access to highly skilled employees, and organizational efficiency, among others. Various business functions are being offshored, and accounting is one of them. But how should you start the process?
This infographic will serve as a guide in building your remote accounting team. It will illustrate the tasks performed by an offshore accounting team. It will also present the steps in setting up an offshore team and the characteristics you should look for in an offshoring partner.
What Do Offshore Accounting Teams Do?
An offshore accounting team performs a range of specialized functions, including the following:
Bookkeeping involves recording financial transactions such as income and outgoings. These include the processing of payments, posting of debits and credits, and creating invoices. Moreover, bookkeeping covers such tasks as maintaining and balancing subsidiaries, historical accounts, and general ledgers, as well as reconciling reports with third-party records, such as bank statements.
- General Accounting
Offshore accounting teams analyze your organization’s financial requirements. Apart from supervising the company’s financial transactions, they also monitor and implement accounts payable check activation and wire transactions. In addition, they assist the firm in the account reconciliation process.
- Tax Compliance
An offshore accounting service provider can help assess the tax criteria applicable to your company. It can also assist you in maintaining contact with external parties to resolve tax issues. Additionally, it can guide your finance, accounting, and operating departments on compliance requirements. In turn, you don’t have to worry about tax deadlines or submitting complete requirements since the outsourcing partner takes care of such tasks.
- Financial Statement Preparation
Your third-party service provider can also help prepare your company’s financial statements such as balance sheets, income statements, and cash flow statements. They can organize accounting information and package them into financial reports ready for forecasting and analysis. This guides the management in making informed business decisions, developing strategies, and predicting future trends and changes.
Hiring an offshore accounting team has various business advantages. Here are some of them:
- Increased efficiency
Partnering with an offshore company can help streamline your processes, as your on-site employees focus on core tasks. This allows for better work results, which translates to increased revenue.
- Reduces workload of your in-house staff
By working with an offshore service provider, you lessen the workload of your in-house staff, especially in times where the demand is high. When the regular volume of work spikes, your on-site team can become overworked. This can eventually lead to burnout, which affects their productivity.
According to a survey, overworked employees tend to produce erroneous outputs. By delegating non-core functions to an offshore service provider, your in-house team can maximize their time to focus better, complete more tasks, and improve their skills, leading to an enhanced quality of work.
Working with an offshore accounting team can reduce your business’s labor expenses, especially if the provider operates from a low-cost location. Various financial considerations go into hiring in-house staff, including recruitment and infrastructure expenditures, insurance, and other employee benefits. With offshoring, you can cut these costs by up to 60% since you only pay a fixed amount for a particular project.
- Access to skilled employees all over the world
Local employment can limit your options in finding the best candidates. Partnering with an offshore accounting team fills this gap since third-party service providers have a pool of talent who are trained to perform even the most specialized jobs. In addition, their employees possess different skills that can address various business needs.
7 Steps to Build an Offshore Accounting Team
Before setting out to hire an offshore accounting team, you must outline the actions you’ll be taking. Here’s a 7-step guide to building your offshore accounting team:
1. Define your objectives
The first step to building an offshore team is to determine your goals and expected outcomes. Include benchmarks that will serve as your guide in reaching your target outcomes such as accounts receivable turnover ratio, timely billing, and periodic financial reporting. Also, don’t forget to indicate other key performance indicators for the company’s profitability, liquidity, efficiency, valuation, and leverage.
2. Know which offshoring model to take
There are two general types of offshoring models – dedicated and functional. Under the dedicated model, the offshore company acts as a middleman, finding employees who will complete the project required by the client. Meanwhile, the functional model allows the offshore company to perform specific functions for the client.
The dedicated model is appropriate if you’re looking to transfer non-specific functions such as bookkeeping and the preparation of financial statements. Since these tasks do not require highly specialized skills, any employee who possesses the general qualifications for the job is likely to complete the project.
Meanwhile, the functional model is ideal if you intend to offshore specific functions like accounting and tax compliance. Since these tasks entail a level of expertise and confidentiality, entrusting them to a particular offshore company can help safeguard your company data.
In deciding which framework to use for your company, you must consider your budget, business goals, and the market landscape.
3. Search for offshore headhunter services who can build your accounting team from scratch
You can find a listing of offshore companies on a variety of platforms like Google, LinkedIn, and Facebook. Look up offshore headhunter services who have a good track record of finding and building accounting teams. You can also seek recommendations from trusted business partners and colleagues.
After identifying your initial preferences, narrow down your options by making a shortlist based on your requirements. In doing this, consider browsing each provider’s website to verify their business portfolio. Then, based on your research, you can make your final selection.
4. Set up policies and guidelines for your offshore accounting staff
Having standard operating procedures in place can help increase efficiency by reducing errors, thereby improving the quality of deliverables. Before crafting guidelines for your offshore accounting team, check first their individual tasks. From there, determine your goals and strategies in terms of productivity. By laying down policies, you help your remote staff understand their respective roles and responsibilities.
5. Invest in equipment and infrastructure
Investing in equipment and infrastructure can help enhance your company’s productivity. This includes incorporating the standard bookkeeping software, invoicing tools, and accounting applications in your processes. If your offshore accounting team is equipped with the proper tools, they can deliver tasks more efficiently. In turn, this can help maximize business opportunities while increasing your profitability.
6. Onboarding and training
Once they start working for your company, you should do several onboarding and training sessions for your offshore team so they can familiarize themselves with your company’s processes and tools. These sessions aim to rapidly ramp up their skills to facilitate smoother operations and, thus, contribute to overall operational efficiency.
To make the remote onboarding process more efficient and interactive, it would be great to invest in systems and tools that facilitate easier communication, such as video conferencing software, online employee handbook tools, and customized portals.
7. Get your in-house team on board
Getting both your offshore and in-house accounting teams to work together helps accelerate task completion. It also allows for the generation of more ideas and perspectives, helping you come up with diverse and innovative business concepts.
You can create an active portal where both teams can connect and talk to each other to discuss issues and help each other out. Alternatively, you can set up an IP phone system with allocated extension numbers to allow for ease of communication. This helps bring both offices closer together, making it easier for them to reach the target goals.
Must-have Characteristics of an Offshore Accounting Service Provider
Here are some characteristics you should look for in an offshore accounting service provider:
1. Proven accounting track record
An offshore accounting service provider should have a proven track record. Look for recommendations about the company’s accounting services or excellence awards presented to the firm for outstanding accounting services.
Consider reading reviews, testimonials, and ratings about the provider to determine how it fares in the industry. You can also ask for information from clients who have worked with the company. This will help you gauge if its services are at par with industry standards or if its processes comply with regulatory requirements.
2. Skilled talent pool
An offshore company should have a pool of talent trained to deliver quality results on time. It helps to verify if the provider’s employees have the necessary accounting degrees, licenses, or certifications needed for the job. If your remote service partner meets this criterion, you can be certain it can address your business needs with efficiency.
3. Culturally compatible
Cultural compatibility plays a big role in your offshoring success. Remember that your offshore team is just as much a part of your company as your on-site employees, as they’ll be working towards the same business goals. While diversity is extremely important and beneficial, it also helps that you share similar aspirations so you can work together on the same page.
The Philippines, for instance, is culturally similar to many Western countries. Apart from generally having the same perspective on lifestyle, both countries also share some similar preferences in terms of trade and investment such as performance and growth, creativity, and efficiency.
4. Reasonable pricing
An offshore company should set reasonable pricing without compromising quality. It should offer affordable fees while still delivering outstanding services. Asian countries, such as the Philippines, are particularly popular for offshoring because they charge lower fees than their European counterparts.
Offshoring Helps Drive Productivity and Profitability
Offshoring offers various benefits to businesses. It allows the in-house staff to focus on core tasks, thereby increasing their productivity. It also helps boost profitability since the offshore team is composed of skilled and trained professionals who can efficiently deliver results on time.
If you’re looking for a recruitment agency in the Philippines that can help you set up an offshore accounting team, Manila Recruitment offers top-notch services. Contact us today so we can start finding and training talents for your offshoring project.