Providing quality services to the clients along with controlling the cost of operations can prove to be difficult for accounting companies in the United States. Outsourced accounting services and offshore staffing have become efficient methods by which they can utilize highly qualified professionals, increase efficiencies in operation and control cost without burdening themselves with too much stress.
This blog post is all about the concept of offshore staffing, benefits associated with it for accounting firms in the United States, the best practices in developing an offshore team and the challenges faced by accounting firms before employing offshore staffing methods.
How Offshore Staffing Works for U.S. Accounting Firms
Offshore staffing is characterized by utilizing experts who are working out of the country where the work will be done. In the case of accounting firms, such experts would aid in carrying out tasks relating to bookkeeping, accounts payable and receivable, payroll, tax preparation, financial reporting, and others related to accounting.
The success of offshore staffing will depend on how duties will be delegated and how well the experts work together with the rest of the people in the firm. With proper delegation, these offshore experts will work like extensions of the firm itself.
Common Accounting Functions That Can Be Offshored
Accounting firms can use offshore professionals for a wide range of recurring and process-driven responsibilities, including:
- Bookkeeping and transaction recording
- Accounts payable and accounts receivable
- Bank and credit card reconciliations
- Payroll processing support
- Tax preparation assistance
- Financial statement preparation
- Data entry and document management
- Administrative accounting tasks
Delegating these responsibilities can allow (Certified Public Accountant)CPAs and senior accountants to spend more time on advisory services, client relationships, financial analysis, and other higher-value activities.
Offshore Staffing vs. Traditional Outsourcing
Despite being similar concepts, outsourcing and offshore staffing differ from each other. Outsourcing refers to the transfer of a particular function or process to an external party. With offshore staffing, a company can get a team or even one person who will work in close cooperation with internal employees.
The difference enables accounting firms to have more freedom regarding workflow, communication, and responsibilities.
Key Benefits of Offshore Staffing for U.S. Accounting Firms
An appropriate offshore staffing approach not only leads to cost savings from reduced labor expenses but can also help companies form flexible teams and increase productivity and capacity as their client list expands.
Reduce Operating and Labor Costs
The first thing that comes to mind when discussing the benefits of offshore staffing for accounting firms is the possibility of reducing labor costs. People who work in offshore locations might have smaller labor costs than people working on U.S. soil.
Reduced staffing expenses could provide more financial room for maneuvering for the accounting firm. This firm could put the saved money towards improving its technology, training employees, investing in marketing activities, etc. At the same time, one should keep in mind that cost isn't the only thing to evaluate when choosing offshore staff.
Access a Larger Pool of Skilled Accounting Professionals
It becomes challenging for firms to recruit suitable accounting professionals when they hire solely from within their local labor market. With offshore staffing, the firm can access a wider talent pool regardless of location.
The experienced offshore staff can help perform accounting tasks in line with the company’s processes. In some cases, depending on the service provider and position, the firm will also access professionals knowledgeable about accounting software.
Scale Teams During Busy Accounting Periods
The workload of accountancy is not usually uniform all through the year. Tax periods, year-end accounting, recruitment of new clients, and project work can cause spikes in workload.
Through offshore staff, companies can increase their staff without the need to have a long-term hiring of people for the spike in workloads. It is very useful especially for growing companies that want to expand without expanding the fixed overhead cost.
Improve Productivity and Turnaround Times
A team offshore can prove helpful in distributing workloads effectively. Repetitive and routine jobs can be outsourced to professionals offshore, thereby enabling internal accountants and CPAs to take care of more complex jobs, which involve decision making and client interaction.
The difference in time zones can also provide an advantage in the workflow process. With effective management, work done by offshore teams after U.S. business hours can push projects ahead.
Allow In-House Teams to Focus on Higher-Value Work
If senior accountants in firms spend more time on administration or repeated activities, there is likely to be reduced capacity for strategic services.
Offshore outsourcing can enable such routine activities to be taken up by offshore staff, which allows in-house professionals to concentrate on:
- Client advisory services
- Financial analysis
- Tax planning
- Business development
- Complex accounting issues
- Client relationship management
The result can be a more productive allocation of the firm’s existing talent.
Best Practices for Building an Effective Offshore Accounting Team
Benefits will be maximized when companies adopt offshore staffing as an organized business strategy, instead of seeing it only as a tool to cut costs. There are several things that may help facilitate cooperation.
Choose an Experienced Offshore Accounting Partner
The appropriate partner plays a big role in making sure that an offshore staffing situation is successful. It is important for accounting firms to find partners who have good experience dealing with other accounting firms in the United States.
Before making a decision, consider asking:
- Does the provider understand U.S. accounting workflows?
- How are offshore professionals screened and trained?
- What quality-control procedures are followed?
- How is client information protected?
- How will performance be monitored?
A provider with relevant accounting experience is generally better positioned to understand the firm’s expectations.
Establish Clear Roles, Processes, and Performance Standards
The existence of ambiguous roles can quickly lead to mistakes and delays. Before the recruitment of the offshore professional, determine what roles and tasks should be taken up by the person/team, and what roles stay within the company.
Develop clear workflow processes which involve information regarding deadlines, approval process, communication channels, quality requirements, and escalation procedures.
Invest in Training and Ongoing Communication
Even accounting experts require training regarding specific protocols of the organization, including software, documentation, and expectations from clients.
Ensure that proper orientation and regular communication is maintained via meetings and progress updates. Written protocols will help minimize misunderstandings, especially if your team works in separate locations at different times.
Use Secure Technology and Protect Financial Data
Since accounting firms deal with confidential information, data security is a key factor that one must consider while dealing with an offshore team.
One must check whether the offshore partner firm employs the right data security practices, which include:
- Access controls and user permissions
- Secure file-sharing systems
- Encryption
- Multi-factor authentication
- Secure data storage
- Employee security training
Access should also be limited according to job responsibilities so that offshore professionals only have access to the information necessary for their work.
Track Performance and Maintain Quality Control
Performance standards should be set for offshore staffing services. KPIs related to accuracy, turn-around time, productivity, completeness, etc., can be set by accounting firms.
Review meetings help in the identification of any issues at the earlier stage, thus helping in rectification of the same. Other quality control measures like checklists, reconciliations, audit and review by supervisors will help in error reduction.
Build a Collaborative Working Relationship
An offshore team will be much more efficient if they feel like part of the company. Collaboration must be encouraged instead of viewing offshore staff members as totally separate from those working at the home office.
Rewarding success, keeping communications respectful, and bringing offshore workers into the proper meetings will facilitate trust-building.
Common Offshore Staffing Challenges and How to Address Them
Though offshore staffing may provide numerous benefits to the firm, accounting companies should be prepared for possible difficulties in terms of operations. These can usually be overcome by proper planning and good communication.
Time-Zone and Communication Challenges
Various time zones can make collaboration even harder at times. Overlapping working schedules would give a chance for the team members to collaborate.
However, routine communications can be managed using project management software, calendars, communication tools, and established processes.
Cultural and Language Differences
Variations in the styles of communication may sometimes lead to misunderstandings. These problems can be solved by the companies through documentation, proper communication norms, and culture.
Professionals who have proficiency in English language communication are very crucial when dealing with accounting that requires detailed instructions and client information.
Maintaining Consistent Quality
The firm is still responsible for ensuring quality when outsourcing its operations. An accounting firm needs to put up review procedures and have clear accuracy standards communicated.
Performance monitoring and regular quality reviews can help point out repetitive problems and keep work in line with the firm’s requirements.
Integrating Offshore and In-House Teams
Employees already working within the company may resist offshore staffing because of fears that they will be displaced by offshore professionals.
Companies can tackle this challenge by telling the employees that offshore staffing will help in distributing workload and enabling them to focus on other more important tasks.
Benefits such as cost management, access to quality professionals, increased operational capacity, and improved productivity are possible by utilizing offshore staffing. Nonetheless, for a successful strategy, it is not enough to hire professionals from other countries; there is a need for defined roles, efficient communication, security measures, training, and performance evaluation.
If used strategically, offshore staffing will be able to add up to an accounting firm's existing workforce, which is needed for workload management and expansion.
The Fino Partners helps US accounting firms explore practical outsourcing and offshore staffing solutions designed around their operational needs. Contact The Fino Partners today to discuss how the right offshore accounting model can help your firm improve efficiency, manage costs, and focus on delivering greater value to clients.
