Offshoring Accounting Functions and How to Make it Work
In the first two decades of the 21st century, offshoring has evolved from a niche practice to a dominant business strategy employed by corporations of all sizes and industries. Among them all, offshoring accounting is the shining star as more and more accounting companies and CPAs seek a helping hand regarding the compliance and back-office functions so that they can focus more on advisory tasks.
In this article, we will not explain the procedure and benefits of offshoring accounting functions (which you might have already known), but to dig deeper into insights we have accumulated from years of helping Australian accounting businesses. These are keys to ensure your offshoring strategies would work to and beyond expectation.
Ensure a smooth transition
More often than not, companies tend to assume that transition is the sole concern of offshoring service providers, which they have little impact upon. In reality, no offshoring strategy ever succeeds without a well-planned, agreed and smooth transition from both ends. Before building your offshore accounting team(s), you can always enforce involvement through steps like:
- Ensure approval and support from management boards and key stakeholders. Internal agreement is of extreme importance prior and during your offshoring journey.
- Define goals and objectives you expect from the offshore accounting teams. If this is your first attempt in offshoring, it is advisable to start with compliant, transactional, supporting roles then increase the scope later.
- Prepare your onshore Australian accounting teams for the changes. Rumours and stereotypes are common among those unfamiliar with offshoring, so it is wise for management boards to clear the mist right from the beginning.
- Also prepare your offshore accounting staff through training, discussions and induction programs. They are the extension to your Australian teams who share similar skill sets and organisational culture.
Choose your own model of implementation
Offshoring accounting functions is not a one-size-fits-all operational solution and different companies will employ different models of implementation. From our own experience, there are two main approaches that are applicable for both first-timers and corporations with offshoring record:
- Optimise the processes first, then delegate to the offshore teams. This is the standard and top-of-mind option for many large corporations as it provides crystal clear, structured and controlled starting point for offshoring accounting functions. However, be aware that streamlining accounting procedures has never been an easy task, especially for start-ups and SMEs with no complete accounting department and could delay your offshoring strategy further.
- Delegate tasks to the offshore teams first, optimise later. This is obviously a more flexible approach which allows your business to start offshoring accounting as soon as possible and polish the procedures along the way. The advantages are time-efficient, suitable for SMEs and practical as you fix all issues at once. Yet, this often requires assistance from offshoring vendors who are in charge of staff onboarding and management, so you can dedicate to accounting functions and technical procedures.
Have a risk mitigation strategy
Risk is evident in any business operation and extension. Therefore, a smart company will always prepare a risk mitigation strategy to prevent the unexpected from happening and, in rare cases, put them under control as swiftly as possible. When offshoring accounting functions, there are three prevalent hurdles including: data security, legal differences and team collaboration.
Normally, partnering with a trusted offshoring provider in the destination country and base your offshore teams at their shared service centres will help address and deal with all those threats. That explains why Australian companies, big and small, are prioritising agile business process offshoring over rigid captive offshoring (i.e. establishment and retention by a firm of their own offshoring operations). Such partnership takes the logistical and managerial burdens off their shoulders, so they could focus on developing offshore accounting teams, maximising ROI and efficiency.
The decision to scale and optimise is often stifled by the pursuit for perfection before doing so. Keep ahead of your competitors, find out the most effective, compliant and efficient opportunities to take your business to the next level.
Since 2011, ASW Global has assisted Australian companies to build their competitive offshore accounting teams. Based in our modern offices across Southeast Asia, these talented offshore staff continually contribute to the operation and achievement of their companies in Australia. No matter what business size and industry your company is in, contact us today to have insightful consultation from experts and make offshoring effective right from the first attempt.