Outsourcing

The slam dunk business case for outsourcing accounting services

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Accountants by their very nature are a cost-conscious breed! So it’s no surprise that outsourcing accounting services to low-cost countries offers instant appeal. We’re talking a 50-70% reduction in cost in the Philippines, for example, for common accounting services such as:

– Accounts payable (A/P)

– Accounts receivable (A/R)

– Collections

– Reconciliations

– Bookkeeping

– BAS filing

– GST filing

– Annual financial statement preparation

– Income tax preparation

– Payroll processing.

High-end forensic accounting, financial planning and auditing services are also available, but starting your outsourcing journey with more straightforward tasks is generally a wise approach.

The fact that there is a critical shortage of accountants in Australia and New Zealand makes outsourcing an even more obvious opportunity.

Further, a flow-on effect of outsourcing transactional work offshore is that your staff are freed up to invest more time in nurturing and growing client relationships, work on more complex accounting issues, not to mention having more headspace for strategic planning.

Qualifications and skills

Philippines BPOs are trained in the same software used by clients in source markets (such as Australia and the U.S.) – Xero and MYOB are two of the most common platforms. Furthermore, BPO staff are trained in the accounting standards of the source markets. CPA Australia and the Philippines Institute of Certified Public Accountants collaborated on a ‘Member Pathway Agreement’, enabling CPAs in the Philippines to become accredited as CPAs for the Australian market.

While a Bachelor of Accounting in Australia and New Zealand is typically three years, in the Philippines, it’s four to five years of study, making most Filipino graduates highly knowledgeable and well-qualified to help clients overseas.

Outsourcing seems to make sense…so what next?

Once you’re “sold” on the idea of outsourcing, it’s important to understand and weigh up the different operating models offered by Philippines BPOs. Specifically, there is the option of a managed service, where the BPO is responsible for KPIs associated with performance, such as:

  • Invoices processed per FTE
  • Collection effectiveness
  • Number of disputes or complaints
  • Error rate

Alternatively, there’s the option of having your own team, where the BPO’s only role is to provide the infrastructure (office/workstation/Internet) and process the staff’s payroll – but the offshore team report to you and achieving KPIs is your responsibility. This latter staff leasing option is preferred by companies that want full control and transparency, integrating their approach and culture, creating a true extension of the local team. It is also a cheaper model – at least on paper – as the BPO doesn’t have to price in risk for performance.

For those who are new to outsourcing, and the mere thought of managing a team in another country is too daunting, a managed service is the best path. It’s always possible to change your operating model down the track, without worrying about being locked into a long-term agreement (tip: aim for flexibility when you negotiate your BPO contract). The idea is simply to get started!

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Security

Regardless of where you choose to outsource, security is paramount. You need to be sure that the BPO you work with has a clear privacy and information security framework, to protect you and your clients’ financial data.

If you are doing a site visit before you enter into a contract with the BPO, things to look out for in the physical facility include:

  • Keypad access for authorised employees only
  • Guest sign-in protocols
  • CCTV
  • Disabled USB drives
  • NDA agreements.

In terms of information security, involve your IT or cybersecurity manager to evaluate the BPO’s approach, including:

  • Use of anti-virus/anti-malware software
  • Firewalls
  • Security updates to devices
  • Disk encryption.

BPOs with internationally recognised accreditations, such as ISO/IEC 27001, provide an added layer of assurance around the seriousness of the BPO’s approach to security.

Selecting the right BPO

There is a massive smorgasbord of accounting BPOs offshore, but first consider the location that is right for your business. Outside the Philippines, Sri Lanka, Fiji, South Africa and India are all attractive options with available accounting talent pools servicing the Australian and NZ markets. Matchboard can provide a no-obligation consultation to discuss the pros and cons of each location – contact us to schedule an appointment.

There are 2 million accountants globally and there is no reason why Australian and New Zealand accounting firms can’t tap the range of the global accounting workforce through outsourcing or staff leasing.

Once you’ve narrowed down the country or countries you wish to consider, selecting the right BPO comes down to a range of factors, including cost, experience, references and cultural fit. A full set of criteria you should consider is outlined in the Ultimate Guide to Outsourcing – a free of charge resource, also containing a workbook to help guide you through your planning and evaluation process.

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Last reviewed for accuracy: January 9, 2024

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