Introduction: Why Offshore Accounting?

Accounting is a critical business process. It’s tough to identify an outcome that doesn’t derive from accounting in any way. For that reason alone, offshoring accounting can be a game-changer. 

If there’s one process that can benefit from the best global talent, it’s accounting.

By hiring skilled professionals in other countries, companies can save money, expand their talent pool, and focus on their core operations. But just because offshoring offers great benefits doesn’t mean it’s always smooth sailing. In fact, businesses often hit bumps in the road because of common mistakes made during the hiring process.

To help you avoid these pitfalls, here’s a playbook on the top accounting offshore hiring mistakes and what you can do to steer clear of them.

Let’s break it down!

1. Skipping the Background Research

When hiring an offshore accounting team, it’s tempting to jump in quickly, especially if the price is right. But failing to do your homework can lead to big headaches down the road.

• Background Checks: Start with basic background checks on the offshoring provider or individual you’re hiring. This can include looking up company reviews, asking for client references, and confirming professional credentials.
• Reputation Matters: Look at the offshore provider’s reputation in the market. Are they known for quality work? Do they have a track record with clients similar to your business?
• Industry Expertise: Different industries have unique accounting needs. Make sure the offshore provider has experience working within your specific industry to avoid misunderstandings and mistakes.

Skipping the research is a classic misstep. Taking a bit of time to investigate upfront will save you from potential issues down the line.

2. Choosing Solely on Cost

Cost savings are one of the biggest attractions of offshore accounting. But if you’re only focused on getting the cheapest deal, you may end up paying more in the long run.

• Quality Over Price: An experienced offshore team may charge a bit more, but they’re also more likely to understand complex financial tasks and provide reliable work. Choosing based only on the lowest cost can lead to poor quality, errors, or even non-compliance with regulations.
• Hidden Costs: Some offshore providers may offer a low upfront price but tack on extra fees for services you assumed were included, like monthly reporting or special data analysis.
• Value Assessment: Instead of looking at the price alone, think about the value you’re getting. A slightly higher cost could be well worth it if it means access to knowledgeable, reliable, and skilled accountants.

Going for the cheapest option can be a recipe for disaster. Look for a provider that balances quality and price to avoid headaches and unexpected expenses.

3. Neglecting Data Security and Compliance

Accounting involves sensitive financial data, which means security should be a top priority. Unfortunately, many businesses overlook this critical factor when hiring offshore.

• Privacy Standards: Make sure your offshore provider adheres to industry standards, such as GDPR, SOC 2, or other relevant data protection regulations.
• Secure Data Transfer: Discuss secure ways to transfer data, including using encrypted file-sharing methods and VPNs. Never send sensitive data via unprotected email.
• Internal Security Protocols: Check if the provider has strong internal security measures to prevent unauthorized access, like password-protected systems and limited employee access to data.

Cutting corners on security can expose your business to data breaches and financial risks. Ensuring your provider has stringent security measures in place will help protect your sensitive information.

4. Ignoring Time Zone Differences and Communication Challenges

Time zones are both a blessing and a challenge in the offshore world. While it’s great to have work done overnight, poor planning around time zones can lead to delays and communication snags.

• Set Clear Communication Expectations: Decide on regular check-in times that work for both teams. Using shared calendars or apps like Slack can help bridge the gap.
• Weekly or Biweekly Meetings: Regular meetings ensure alignment, address questions, and build rapport. Having a set schedule for discussions helps both parties stay on the same page.
• Avoid Language Barriers: Clear, effective communication is key in accounting, where one small miscommunication can lead to big mistakes. If language is a potential issue, make sure you’re working with English-proficient accountants, or consider providing written instructions to avoid misunderstandings.

Ignoring the time zone difference or language concerns can lead to misaligned priorities and missed deadlines. Plan ahead to keep everyone in sync, no matter where they are.

5. Failing to Define Roles and Responsibilities

A common mistake in offshore accounting is assuming that everyone knows what’s expected of them. When roles aren’t clear, tasks slip through the cracks or get duplicated, leading to inefficiencies.

• Set Job Descriptions: Define specific responsibilities for each team member, whether they’re in-house or offshore. Who handles payroll? Who’s in charge of reconciliation? Make sure each role is clearly outlined.
• Detailed Task Outlines: Be clear on deadlines and deliverables. Provide a checklist of tasks and deadlines, and agree on timelines for routine processes, like month-end closing.
• Accountability Tracking: Use project management tools like Trello or Asana to track tasks and hold everyone accountable. This reduces confusion and ensures work is progressing as planned.

A lack of clear roles can lead to costly mistakes or overlooked tasks. Setting clear expectations makes the workflow smoother and helps avoid miscommunication.

6. Overlooking Training and Onboarding

Even though your offshore team is skilled in accounting, they don’t necessarily know your company’s processes, software, or preferred practices. Investing in training can make a huge difference.

• Provide Access to Tools: Give your offshore team access to the same accounting software and tools your in-house team uses. If necessary, provide training to get them up to speed.
• Document Processes: Create clear documentation on your accounting processes, so your offshore team has a reference guide. This can include steps for data entry, monthly reporting, or compliance checks.
• Initial Training Sessions: Spend a bit of time upfront on training sessions to explain your company’s specific needs and expectations. This might seem like a time investment, but it’ll save you effort in the long run.

Skipping onboarding and training can result in mistakes or misaligned work practices. With proper guidance, your offshore team will be better prepared to handle tasks efficiently.

7. Underestimating Cultural Differences

Cultural differences can impact everything from communication styles to decision-making approaches. Failing to take these differences into account can lead to misunderstandings.

• Respect Different Work Styles: Some cultures prioritize hierarchy and formal communication, while others prefer a more collaborative approach. Understanding your offshore team’s cultural norms can help you communicate more effectively.
• Encourage Open Feedback: Some offshore teams may hesitate to provide feedback, especially if it feels confrontational. Foster a culture where your offshore team feels comfortable asking questions and sharing input.
• Be Aware of Holidays and Schedules: National holidays and work hours may differ, so plan around these to avoid scheduling issues. If you have critical deadlines, make sure to clarify availability in advance.

Being aware of cultural differences can improve communication and reduce misunderstandings, creating a stronger working relationship.

Conclusion: Smart Offshoring 

Offshoring your accounting can be incredibly rewarding when done right, but it’s important to avoid common mistakes that many businesses make. 

Valuing quality over cost, ensuring data security, planning communication schedules, defining roles, investing in training, and respecting cultural differences will get you halfway on your path to offshoring success. 

Your offshore team can contribute just as much as your in-house staff when they’re given the right tools, clear expectations, and a little trust.

If you take these tips to heart, you’ll be well on your way to building a reliable and effective offshore accounting team.