An offshore accounting team may be formed to give U.S.-based companies access to professional accountants and help them perform their routine accounting functions without having to add every department. Offshore accounting may serve as a helping hand to businesses that have set up certain routines and control over them.
In this blog, we will discuss seven effective ways to build and manage an offshore accounting team. These tips cover how to choose good professionals, apply the necessary technology, improve communication, and protect sensitive financial data. With these tips in mind, businesses may create a reliable offshore accounting setup.
1. Define Your Accounting Goals and Set Clear Expectations
Firstly, to put together an offshore accounting team, you should understand which accounting functions should be outsourced and what is supposed to be done by the team. You should assess your existing accounting process and determine which part needs more help and which includes performing bookkeeping, bank reconciliations, invoicing, payables, receivables, payroll, and financial reporting tasks. The scope of work will provide grounds for choosing the right offshore team.
Afterwards, it is necessary to set some expectations regarding quality of work performed, deadlines, tasks, and communication. It is important to write down those people who are supposed to prepare the accounting records and approve significant actions. For example, your offshore accounting team will reconcile accounts and prepare monthly reports which will be approved by your finance manager.
2. Choose Qualified Offshore Accounting Professionals
The effectiveness of the offshore accounting team will depend on their skill set, expertise, and experience. Hiring individuals who have experience in certain areas, such as bookkeeping, general ledger management, account reconciliation, accounts payables/receivables, and accounting reporting will be key. If you are from the United States, then having someone with knowledge of the American accounting system will also be crucial. Attention to detail, problem-solving abilities and good communication abilities needed to work well with internal finance department will be critical as well.
Assessment of potential employees will be done through interviews, assignments, and looking at previous experience of the individual. The experience with some kind of accounting software, such as QuickBooks, Xero, NetSuite, will also be useful depending on your current system. It will be necessary to decide if you need your own professionals, shared service, or managed offshore accounting team. Depending on volume of transactions, reporting requirements, internal experience, and work load, proper decisions can be made.
3. Implement the Right Accounting Technology and Software
A technological approach is extremely important in the process of connecting offshore accountants with other personnel in the firm. Pick up the accounting solution that will match your requirements in terms of transactions, reporting, integration, and processes. QuickBooks, Xero, and NetSuite can perform accounting functions like financial record keeping, reconciliations, invoicing, and reporting based on its configuration and offered services. Collaboration tools like Microsoft Teams, Slack, and Zoom can be used in order to coordinate work and solve issues between offshore and other employees.
Make sure that the standard transaction recording, documentation storage, discrepancy reporting, and financial information review procedures are established. Cloud-based systems will allow remote access to the necessary information for the authorized employees without using email to exchange the information regularly. Automated functions of software can simplify such routine operations like invoices processing and transactions categorization. However, an automated system cannot replace people's judgments as there can be some errors in transactions and/or their categorizations. Make sure that the system incorporates controls and exception reporting.
4. Invest in Continuous Training and Professional Development
Technology plays a crucial part in connecting offshore accounting professionals to other staff of the firm. Select accounting technology which will match your organization's transaction volume, reporting, integration and procedure requirements. QuickBooks, Xero, and NetSuite software may serve to organize accounting records, reconcile accounts, send invoices and make reports, depending on the set-up and offered services. Collaboration tools such as Microsoft Teams, Slack and Zoom may help in coordinating work and solving problems for employees working in different locations.
Make sure that there is uniform transaction recording, documentation storing, reporting of discrepancies, and reviewing of financial information. You may use cloud-based technology to provide access to relevant information for the authorized employees remotely without using emails for sharing data. Automation of some processes by means of software will be helpful in dealing with routine tasks, such as processing invoices and classifying transactions. However, automated systems cannot be an equivalent to human judgement because of possible errors in transactions or their misclassification.
5. Maintain Clear and Consistent Communication
Communication plays an important role in the cooperation between accounting units of the offshore company and the onshore company that are situated in different locations. The communication schedule needs to be established taking into account the accounting cycle of the company. Regular meetings could help managers to share information about possible problems and discrepancies, as well as to identify missing documentation. Also, the owners of the business need to establish the procedures concerning the timely reaction to inquiries and handling the urgent inquiries when managers are not available.
It is critical to document all decisions, changes in accounting policy and approval guidelines. Documentation serves as a means to avoid misunderstandings and provides staff with an easy-to-access source for performing the same tasks repeatedly. However, collaboration should be carried out by both sides. Offshore employees require an opportunity to contact the manager and voice their questions or concerns and report about the incompleteness of some data. This approach ensures the possibility to resolve any potential issue even before it starts affecting the deadlines or records.
6. Prioritize Data Security and Compliance
The offshore accountants can also be privy to confidential business information such as the company's financial reports, banking information, payroll, vendor data, and customer data. As such, businesses need to implement adequate controls prior to granting access to the company's accounting system. Such controls include individual user accounts, multi-factor authentication where possible, encryption, use of secure file sharing services, and role-based access control. The employees should be granted access to only those documents and records that are necessary for performing their assigned tasks.
Moreover, the business needs to conduct a review of the privacy requirements, contractual provisions, and regulatory mandates that will impact its operation as well as the process of outsourcing accounting services. Such obligations may vary based on the kind of information, jurisdiction, and industry. While the GDPR may apply to certain personal information processing activities, the U.S. federal and state laws may be different. Establish confidentiality requirements, reporting incidents policies, record retention policies, and removal of employee access. Security audits will help identify any vulnerabilities, however, outsourcing will not relieve the business of its obligations to manage its financial information and any compliance obligations.
7. Track Performance and Improve Processes Regularly
It is necessary that the business identifies if there is any fulfillment of the expectations once the team has become functional. This will depend on the activities undertaken by the team and will require choosing KPIs accordingly. It might include reconciliations done, speed of reporting, time taken to process the invoice, outstanding differences, and revisions done during the process of review. Consistent definition of the measures will facilitate evaluation and problem identification in a particular period. This will also be determined through realistic expectations taking into account complexity of transactions, work load, and documentation.
Feedback provides useful insights in the review process to help organizations improve their accounting processes. It is important for the organization to consult both the offshore professionals and the organization itself to know the cause of delay and error. It could be poor instructions, lack of training, documentation, and inefficiencies in the process. Good performance should be noted and poor performance corrected by developing workable improvement plans. Business organizations should assess the capability of the team to meet growing transaction and reporting requirements.
Setting up and overseeing an offshore accounting team calls for proper goal setting, competent personnel, right technology, training, communication, data protection, and performance evaluation. The use of these seven techniques is beneficial to firms in creating proper working procedures, better visibility of financial procedures, and appropriate supervision of accounting procedures.
Offshore accounting set up that will work best will depend on the firm’s size, reporting needs, internal capabilities, and future plans. An offshore accounting set up treated as a business partnership will be beneficial to U.S. firms in getting more capacity while maintaining control of financial processes.
The Fino Partners provides outsourced accounting and bookkeeping support for businesses and accounting firms based on their operational requirements. Depending on the engagement, services may include bookkeeping, account reconciliations, accounts payable and receivable, and financial reporting support.
