Offshore accounting continues to be one of the most popular services in the industry. During the pandemic, many companies managed to outsource and continue their operations with less hassle.
This can also help your businesses grow better in the new normal. Find out how offshore accounting can benefit you through this article.
What is offshore accounting?
Offshore accounting refers to finance and accounting services delegated to a firm or business process outsourcing (BPO) company in a low-cost country.
Accounting is a crucial part of a business. Companies need to keep track of their records to manage their budget and as a part of their compliance. While most businesses take care of these in-house, some prefer to hire an offshore team from other countries such as India and the Philippines.
According to some reports, accounting functions are among the most outsourced functions by small and medium enterprises (SMEs). Offshore accounting services can be useful in delegating complex and non-core functions, such as the following:
- Tax compliance
- Accounts receivable and payable
- Payroll management
- Inventory management
Why businesses use offshore accounting
Businesses have the option to hire accounting services in-house, but often this can be overly expensive and involve too much management oversight. Offshore accounting offer high-quality services at a fraction of the cost, and they can feel almost the same as an in-house team.
Everything from basic bookkeeping and management accounts to tax accounting and even CFO advisory can all be done effectively from overseas. Those who decide to have work done offshore do so due to the following reasons:
Offshore accounting cost
Having an offshore accounting staff from the Philippines can save you 60% to 80% compared to your local in-house or accounting services. The cost differential is incredible.
This is one of the major attractions of sourcing offshore accounting services. It is important to note that the quality, reliability, and security of the service are not compromised in any way.
Workload spikes due to demand
In-house work may be ideal when you expect a regular volume of workload. However, there may come a time when your workload spikes up depending on your demand. This leaves your team overworked, which may cause them to experience burnout.
Most companies use offshore accounting to manage workload when the demand gets high. One good thing about hiring offshore services is that they get to hire a team for a short period, either within their peak season or red dates.
Then, they can scale their workforce flexibly when the demand lowers or keep their teams working with them.
Finding suitable accounting talent
Local employment can limit your capabilities in finding the best talent for the job. Due to the low unemployment rate, you might also have difficulty looking for suitable talent in your area.
This is one of the advantages when hiring offshore staff. They get to hire global talent that is suitable for the role they need at a quarter of a local talent’s cost.
For instance, a company can simply hire a virtual accountant to prepare their financial statements every quarter and a few bookkeepers to regularly monitor their accounts and inventory.
Overload in-house staff
As your business grows, it is natural to find your workload increase as well, and this may get out of hand over time. As a result, you and your in-house staff can get overworked. This can cost your business more than expected, especially with the quality of their work and your products slowly decreasing.
Getting offshore accounting services helps companies lighten their workload and expand their businesses more easily. With this, the quality of their work also increases, which can increase their profit.
Offshore accounting also helps them take care of their employees better by maximizing their time to improve their skills.
Ways your business can benefit from offshore accounting
Aside from the above reasons, offshore accounting services can give you better benefits and help you get the best out of managing your business. Here are some of these benefits.
Offshore accounting helps you with keeping up with your compliance better. You won’t have to worry about getting late on tax deadlines or submitting incomplete requirements on time. Your outsourcing partner can take care of this for you instead.
Most accounting firms in offshore countries follow deadlines and compliances in the West, where most of their clients are located.
Shared operational management
Hiring employees poses several risks in a business. You get to shed employee salaries, costs, and resources needed to start their operation.
Some of the things you should provide include workspaces, desktops, office supplies, accounting software, and additional compliances for work standards, such as ISO.
You also have to determine whether they will work for you permanently or for a short period. Unfortunately, hiring in-house can be impractical if you only need them for a short-term project.
When you hire offshore accounting firms, you get to share these risks with your outsourcing partner. You won’t have to shed extra money for hiring, preparing, and managing your team since they get to share these responsibilities with you. As a result, these risks will be lessened, and your accounting service will improve.
Accounting requires high accuracy, full focus, and expertise. Entrepreneurs like you might have the ability to handle several tasks at once, but it won’t be effective when you try bookkeeping and accounting. You might end up with penalties and higher fees just because of errors in your financial statements and payroll processing.
Offshore accounting services rely on talents that are experienced in handling volumes of documents, bills, and books of accounts of your company. By delegating accounting to them, you get to free your time spent on accounting tasks and have your documents accurately and on time for tax deadlines.
High transparency and data security
Many businesses worry about their data getting exposed when hiring offshore services. However, they should think otherwise.
Offshore accounting firms such as those in India work under strict measures in a controlled environment to protect their client’s data. As part of their operations, they follow standard procedures according to international standards and data privacy laws in the West and their country.
Government support also helps these firms to lower their operational costs and maximize their IT and security efforts even more. Because of this, you won’t have to worry much about your data.
Lastly, there are times that you won’t always need to do accounting. Either it is because you have done your quarterly financial report, have already made sure your inventory is updated, or have automated your payroll.
However, you would be obliged to keep your in-house team since they look forward more to staying long with your company, even when their work demand went down.
One of the advantages of offshore accounting is the ability to scale your employees when needed. You can flexibly hire some help when you need it the most and scale down your employees when your crucial work is done.
Where to find offshore accounting services
The Philippines and India are some of the go-to countries when it comes to offshore accounting. The two countries can produce high-class, educated, and experienced accountants that can help with handling their client’s finances.
If you’re looking for a cost-efficient way to track your finances, offshore accounting is the surefire way to go. BPO companies can help you with your business process so you can focus on plotting your future plans with your company.
An offshore accounting company also helps you to monitor your company’s finances and spending, allowing you to see where your company’s cash flow and accounting books.
How to find the best offshore accounting company for your business
There are many companies in the world that offer their offshore accounting services to various industries worldwide. They do a wide range of accounting functions, including generating financial reports, tax preparations, filing income tax returns, and fulfilling the company’s accounts payable, among others.
When looking for an outsourced accounting services firm that best fits your organization, you must consider the following factors:
- Cost-effective. One of the major reasons for recruiting an offshore accounting firm is to save money. After all, if they turn out to be more expensive than an in-house team, then you should reconsider outsourcing your accounting service.
- Team of experts. Since accounting deals with numbers and calculations, make sure that your offshore accounting partner has a team of skilled employees that are experts in the field.
- Reliable. Accounting, just like other tasks, involves strict calculations and deadlines. It is important to recruit an offshore accounting team that could adhere to these two things and knows how to secure your data against any cyberattacks that could potentially happen.
- Technology and infrastructure. Having the latest software could make a lot of difference in your accounting work. It also helps complete tasks with minimal errors in computations.
- Customized services. Every business is different. Finding a company that could customize its offerings to what you need is crucial so that you can see optimal results for your business.