5 MISTAKES TO AVOID WHEN CHOOSING AN ACCOUNTING OFFSHORING PARTNER
Even before COVID-19, accounting firms used cloud and remote accounting, as well as outsourced bookkeeping, to give their workers the flexibility to complete work from anywhere. The pandemic's arrival accelerated technological advancement to keep a competitive edge and offer flexibility for productive work from home. Companies are now seeing the advantages of working outside the office as employee expectations change. As people get used to doing business remotely, we may anticipate seeing a significant increase in the numbers.
Outsourcing your accounting tasks to experts in a country like India allows you to save time and money. It also enables you to increase the output of your domestic workforce. However, as with all industries, there can be a few hiccups along the way. For many firm owners finding the right staff continues to be the top concern, according to AICPA.
To minimise your offshoring concerns, we’ve put together a list of the top 5 things accountants and CPA firms should avoid doing when considering offshoring.
1. Avoid Working with Freelancers
Few freelance contractors stay for the long term and join the business; most come and go. Most businesses simply employ independent contractors and freelancers when needed for shorter-term projects. For full-time employees, this frequent rotation can be both disruptive to the workplace and inconvenient. Furthermore, because different contractors do work of varying quality, the overall quality of the job that is delivered may be compromised.
Due to resource constraints, freelance work is not intended for tight client-freelancer collaboration (especially in developing countries). It is challenging for a freelancer to work remotely with a customer due to recurrent power outages and inconsistent internet due to inadequate infrastructure. Working with a freelancer is also unrealistic because they handle numerous clients concurrently and frequently work different hours for each client due to time zone differences. Additionally, because a freelancer works independently from home, the client is unable to verify the security of how their data is used and ensure that there have been no unethical or data-breaching acts.
2. Avoid Working with Small Mom and Pop Accounting firms
Be cautious of scammers claiming to be accounting firms, as they are prime targets as offshore accounting grows quickly. There are a lot of new small mom-and-pop businesses popping up, and if you're not vigilant, they might steal information about your clients by pretending to be accounting outsourcing companies. Therefore, always make sure to conduct thorough research before selecting your offshoring partner.
Due to the uncertainty of their survival, it is thus best to avoid using independent contractors or small groups for offshore staffing. You cannot depend on their promises or services either, which will cause a delay in the client's deliverable.
3. Avoid Working with local CA firms
Offshoring is a service-based industry. Legit and good service providers will have the technology and infrastructure that will enable them to fulfil all your needs and more. They are well-equipped to deal with all sorts of issues that might crop up and, thus, will go a long way in helping you have a smooth experience with offshoring. Local CA firms primarily handle the finances of dozens of companies at the same time. They are also mostly well-versed only with domestic laws and regulations and do not specialize in offshoring.
Offshore companies specialize in working with CPA firms which means they understand your specific needs and requirements. Your offshore staff will be exclusively working for you during his/her hired working hours. This will also enable you to build a solid foundation of trust and mutual understanding between your offshore and onshore teams. None of this is possible when dealing with a local CA firm.
4. Avoid working with partners who also work with end clients/businesses
Make sure that you establish communication and directly deal with reliable professionals from the offshore service provider of your choice. It’s best to avoid working with outsourcing companies who also work with end clients as they have access to accounting firms of end clients as well. This is an extremely risky practice that we highly discourage as it creates a conflict of interest.There have been instances where an outsourcing partner has access to a firm’s end clients and could approach them directly and poach the firm’s clients. The best practice here is to work with an offshoring partner that only works with accounting clients. In addition to this, you should also have a non-solicitation clause to reduce the risk of your clients getting poached.
We would urge everyone looking into hiring offshore staff, to only carry it out in an authentic way. Only entertain genuine companies and professionals to ascertain that you do not suffer any sort of financial or security loss in the future.
5. Avoid Outsourcing firms with a Diversified Focus
We understand that starting on this journey might be scary and overwhelming. However, time and patience are two habits that will pay off great dividends down the road. It is of the utmost importance that your offshoring company deals with clients exclusively in your industry. Accounting requires niche qualifications and expertise which, if the offshore firm is not adept at, is bound to cause a decline in quality and efficiency in the service provided.
It is only then that they would have the adequate experience and knowledge to fulfil your requirements. Outsourcing firms that cater to multiple industries will never be able to give you the kind of specialised service your firm needs. At Entigrity, we often come across potential clients who are interested in hiring offshore staff for a wide range of services such as HR management, marketing and customer relations. But the company has always maintained a dedicated focus towards providing optimum services to those exclusively in the accounting industry. Hiring a firm with a diversified focus often makes it unlikely that the offshore staff they would provide would have the specific qualification required to handle the work pertaining to the accounting industry. Be aware of offshoring companies such as AccSource and Mindspace who work with different industries but claim to focus on accountancy firms.
As they say, “Knowledge is power.” Research and conduct a thorough due diligence on the offshoring company you are looking into. It is imperative to see if their ideas, ethics and goals are in line with yours. Any kind of accounting outsourcing decision is significant and shouldn't be made hastily. After all, even a minor offshore error can negatively affect the reputation of your business.
Knowing the five most frequent offshore accounting concerns mentioned above can protect your firm from expensive losses and help you get the most out of your outsourcing partnership. Nowadays there are a plethora of choices of offshoring providers which can cause even more apprehension as they all seem to make similar claims. When vetting an offshore accounting supplier, good research is crucial. Check out their social media, ask to speak to their previous clients and most of all spend time talking to the supplier. Get to really know them and then go with your gut.
Entigrity™ is a trusted offshore staffing partner to over 650+ accountants, CPAs and tax firms across the US and Canada. Our flexible and transparent hiring model gives helps firms of all sizes to hire staff for accounting, bookkeeping, tax preparation or any other task for 75% less cost. As a firm 'run by accountants, for the accountants', Entigrity captures the hiring needs of accounting firms most precisely, providing staff that works directly under your control and management, still you are left with least to worry about compliance, payroll taxes, overheads or any other benefits.