Outsourcing and Offshoring are 2 different processes. Offshoring is geographical in nature. It involves shifting and moving the activities and operations of a business to a foreign location. The business tasks, workload, and duties are delegated to a team of professionals in another location, region, or nation.
Outsourcing on the other hand is the process of employing a third-party service provider to handle the company's internal operations. In simple words, it is when an firm or company hires another organisation [usually a third party] to do some of its work instead of employing its own staff.
Although both the terms are often used interchangeably and used to refer to each other, they are not the same.
Offshoring has become a popularly used option by many businesses and agencies around the world. This is due to the benefits like lower labour costs, access to highly trained personnel, better operational efficiency and higher productivity, that offshoring provides.
Accounting is one of the tasks/functions that is offshored. Hence, in this blog, we have broken down Offshore Accounting for agencies who wish to adopt offshoring.
Here, let us understand the tasks and the duties that an offshore accounting team completes:
The financial requirements and necessities of your firm are examined by the offshore accounting team. They manage and execute accounts payable check activation and wire transactions in addition to overseeing the company's financial operations and activities. They also help the firm with account reconciliation processes. The offshore team also provides reliable advice relating to all accounting matters.
Accounts Payable is a term used to describe the money that a business owes to its suppliers for goods or products or services that were purchased on credit. The accounts payable service offered by offshore accounting teams involves processing and monitoring transactions between the firm and its suppliers, as well as ensuring that any outstanding bills from suppliers are processed and paid.
Accounts Receivable is the term used to describe the money owed to the firm or business by its customers. This money is the balance that is owed to the firm for the products that were used or services that were rendered to the customers but are not paid for. The offshore team makes sure to provide firm with all the information they need to understand their outstanding invoices.
Tax preparation is a tax advisory service that focuses on taxes rather than financial statements. This service provides functions like analysing financial and tax difficulties, devising solutions, and offering suggestions for improvement or changes. The offshore accounting team also help their clients understand what implications of taxes on their financial decisions.
Financial reporting is the accounting process of documenting financial operations over a period of time, usually quarterly or yearly. The statements that are documented reveal the financial information about the firm and can be used to measure the firm’s performance for that time. Financial reporting is a service that can be used to understand where money is coming from, where it is going and how much money the firm has. The firm can make informed decisions based on the company’s financial health through financial reporting.
Payroll accounting ensures smooth financial operations by making sure that employees receive proper compensation for the work done by them. Payroll services document, track and file the records for employee compensation data to help the accounting department know how much earning to reimburse to employees. These records also help human resource departments with performance evaluations.
Bookkeeping is the process of keeping track of financial transactions such as revenue, income and expenses. Payment processing, debit and credit posting, and invoice creation are all examples of these tasks. Bookkeeping also involves recording a firm or company’s financial transactions into organized accounts on a regular basis. There are many methods of bookkeeping like single-entry, double-entry, cash-based and accrual-based.
Here are a few advantages that hiring an offshore team will give to your firm:
In-house teams are trained and recruited to work in a firm. But when a company grows or demand increases, employees can become overburdened and overworked. This not only affects morale but also productivity. Offshore accounting teams are a solution for this. They share the firm’s workload and help to increase productivity.
The offshore accounting team allow the firm to focus on their core competencies and also allow them to focus on business growth by sharing their workload. It not only increases the productivity of the firm but also increases the efficiency of the firm as well as the in-house teams. They help streamline operations and work processes as well. This will ultimately also help to increase revenue.
Hiring offshore teams is a great way to save costs. Firstly they are affordable options in themselves as they don't have to be housed on-site. They operate remotely or in their own location. They also do not need to be maintained like an in-house team as they only need to be hired and not recruited or trained. This makes them quite cost-effective.
Offshore accounting teams consist of professionals who are experienced in their respective fields and who are experts at what they do. They bring this expertise, experience, and professionalism to the table with them. Firms can also benefit from their various skills and talents as they are trained to perform even specialized jobs.
Here we have outlined the methods for establishing an offshore team:
The first step in forming an offshore accounting team involves identifying your goals for such a team and what are your firm’s expected outcomes. Firms should also determine and set the benchmarks that they want to achieve by employing the services of an offshore accounting team. This can include performance indicators for the company's profitability, liquidity, efficiency, etc and benchmarks like accounts receivable turnover ratio.
Offshoring is classified into two types: dedicated and functional. The dedicated model involves the offshore company acting as a middleman, finding personnel to fulfil the client's task. The functional model, on the other hand, involves the offshore firm performing specific tasks for the client.
The dedicated model is useful for non-specialized tasks like bookkeeping while the functional model is useful for specialized tasks that require specialized professionals like tax preparation.
To help find employees and professionals to build a team from scratch, offshore head-hunter service companies can be hired and used. Such companies have a history of finding and building good, reliable accounting teams. The listings of such companies can be found online and their websites and portfolios should be analysed by you according to your requirements. Make a shortlist of the best head-hunter companies and then based on your research, you can make your final decision and start building an ideal team.
To help the offshore accounting team understand their roles, responsibilities, duties and tasks, it makes sense to set up a few standard rules and guidelines to guide the team. By setting up operating procedures and policies you can ensure there are lesser errors and hence there are quick and high-quality deliverables.
To make sure that your business efficiency is high and that productivity is maintained if not raised, proper equipment and tools need to be used. The firm should adopt the use of proper accounting tools like bookkeeping software, invoicing tools, and accounting applications. If the offshore team has access to these tools, then they too will be able to deliver high-quality results.
Once the offshore accounting team is established and they start working for the firm, it makes sense for them to familiarize themselves with the firm. The firm should carry out various onboarding and training sessions so that the team can assimilate the firm’s processes and ways of working into their own ways of working.
To ensure the maintenance of productivity and efficiency the firm should make sure that its in-house teams can work together with the offshore accounting team without issues. The firm can set up a portal that will allow them to communicate, share ideas, help each other out and ultimately make sure that the tasks are being completed efficiently.
Here are a few of the qualities an firm should look for in an offshoring partner:
An offshore accounting service provider is an organisation whose very job involves connecting prospective agencies to offshore teams. Hence, they should possess a proven track record. You should determine if it is known for its services and if it fares well in the firm. This can be done by going through its websites and information to search for awards, good reviews, positive testimonials and more.
The offshore service provider must have a personnel pool that has been trained to provide high-quality results. It aids in determining whether the provider's staff has the required degrees, licences, or certifications for the job. If the service provider fits this condition, agencies can be assured that they will meet your business's demands.
The offshore accounting team is a part of your firm just like the on-site and in-house employees. Both will be working towards the same business aims, goals, and objectives. This is why the culture gap must be less between the teams. It can never happen that there will be no gap at all, so agencies should ensure that the teams are compatible enough. It helps if the offshore team shares the same views on work and lifestyle as the firm.
The offshore accounting should be able to be hired by the firm at an affordable rate without compromising on the quality of results. The firm should be able to hire teams that offer affordable services.
Now you know how offshoring is beneficial for agencies and businesses and how to choose and build a proper offshore accounting team. We at Stanfox are an offshore accounting firm that offers reliable, efficient, and useful services to CPA firms, businesses and individuals as well.
Visit our website to find out how we can add value to your business: https://www.stanfoxes.com/