What is Offshore Accounting? Can Your Company Benefit from Remote Accounting?

Offshore Accounting (or Remote Accounting), like the name implies, is simply performing some or all of your company’s accounting function outside of your home country.

Dave Schnitt
May 4, 2022
Offshoring, Offshoring Accounting Solutions

Introduction

Offshore Accounting (or Remote Accounting), like the name implies, is simply performing some or all of your company’s accounting function outside of your home country. While this article explores the key questions you might have about offshoring accounting roles, and we highly recommend you read the full article, here are the key points we will focus on:

Why do companies offshore accounting?

Companies choose to offshore their accounting due to the significant benefits this technique provides:

Help finding the right talent

It is increasingly difficult in industrialized countries such as the US and UK to find qualified accounting talent. But in countries with developing industries offshore talent is plentiful with large, highly trained populations. The Philippines, for example, has a diverse base of over 175,000 US GAAP trained CPAs alone and many more accounting professionals, while the pool of CPAs in the US is shrinking. In addition, growing companies can scale quickly offshore, which is difficult to do in the US or UK, given the current large labor shortages.

Costs are lower

Companies will generally save somewhere between 30% to 50% or more for the same quality of talent because the salaries are often lower overseas. This is increasing as accounting salaries have escalated steeply in recent years.

Augment existing teams

Remote accounting allows a company to augment an existing accounting team by adding staff at a lower cost. In other words, a company can now afford to scale. By adding enough staff to make a significant difference in the operation of the accounting department and improve accounting processes and timeliness overall.

Timeliness

By having an accounting team overseas, the team can work overnight, thereby closing the books faster as well as speeding up other accounting functions.

What are some of the disadvantages of remote accounting?

Offshoring accountants has considerable benefits but has some drawbacks that can be overcome with some thought and planning:

Remote teams

By definition, the offshore accounting team is a remote team. Many accounting departments, especially since the pandemic, have been working remote and have become more aware of the challenges inherent in doing so. Any remote work requires tools to effectively communicate such as web meeting software, messaging and other tools. Other software available helps a distributed team manage the monthly close cycle, for example. Management oversight including explicitly setting goals and deliverables as well as tracking performance metrics is more important than ever with an offshore team.

Cultural issues

People in other countries have different cultures and values. This requires work on both sides to be able to communicate and work together effectively, and the issues depend on the countries involved. Identifying and understanding these issues is crucial.

Is remote accounting the same as outsourced accounting or BPO?

“Offshore accounting” is not “outsourcing” or “business process outsourcing.”

“Outsourcing” is where a company hires another firm to perform a particular entire function or set of functions, such as accounts payable, accounts receivable or all accounting. The outsourcer is responsible for performing these processes including the staffing and management of the accounting team.

By contrast, “offshore accounting” is where a company has a dedicated accounting team that that happens to be in another country that the company must manage. Usually a company will contract with a third party to recruit the team that will handle all the administrative support for the team to function including HR, IT as well as provide office space and other infrastructure as needed.

What size company offshores accounting?

Interestingly, the first companies to use this staffing technique were accounting firms themselves. Today more than half of all domestic US accounting firms use offshore teams. Now companies of all sizes offshore their accounting roles, but growth is fastest in larger enterprises due to the lack of available domestic accounting talent.

Offshoring Accounting - Conclusion

Offshore accounting is one of the fastest growing techniques used by companies to achieve corporate goals of timely and reliable accounting processing. It allows companies to find the talent that is in such short supply at a significantly lower cost and be able to meet their timelines for accurate financial reporting.

Are you looking for a dedicated, remote Accounting Team? IQ BackOffice can help.

Here at IQ BackOffice, we build remote, offshore accounting teams that work as an integral part of our clients’ operations. We offer the best global talent at cost-effective rates so you can enhance your financial operations and achieve your goals faster. We help you do everything needed to build a team, from helping you design a strategy to recruiting, setting up interviews, onboarding your team, providing infrastructure and ongoing administration.

IQ BackOffice will meet with you to understand your business goals and the requirements for each position and then find the perfect candidates to join your team. We build dedicated teams exclusive to your account that we provide with the infrastructure and tools to work effectively with you. Lastly, we handle the administrative aspects of your team – payroll, HR, etc., so you never have to. All for 1 simple monthly fee.

Contact IQ BackOffice today to learn more about building an effective Global Accounting Team.

FAQ

What is remote accounting?

Remote Accounting, or Offshore Accounting, like the name implies, is simply performing some or all of your company’s accounting function outside of your home country.

Why do companies offshore accounting?

Companies choose to offshore their accounting due to the significant benefits this technique provides timeliness, lower costs and finding the best talent.

What type of companies offshores accounting?

Interestingly, the first companies to use this staffing technique were accounting firms themselves. Today more than half of all domestic US accounting firms use offshore teams.