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    How to Outsource Accounting to the Philippines: A Complete Guide for Employers

    There’s an ongoing accountant shortage in many countries like the United States, the United Kingdom, and Australia. In the US alone, there are fewer enrollees for accountant courses but a higher demand for accountants.

    Many critical financial and administrative work in a business requires an accountant’s expertise. For example, the monthly fiscal close process takes most accounting teams at least six business days to complete. To address this growing accountant shortage in the West, many businesses seek the help of Filipino accountants.

    If you want to start outsourcing finance work, here is a guide on outsourcing accounting tasks to the Philippines. It covers three reasons to outsource accounting to the Philippines and five tips on how to do so efficiently.

    Why Outsourcing Accounting to the Philippines Works

    Why should you outsource accounting tasks to the Philippines? We listed three main reasons why this change benefits your business, helping you decide if you need it in your company.

    Competence in Technical Skills

    Accounting is a technical field. Businesses that offshore accounting to the Philippines should be concerned with their technical capabilities.

    The financial reporting standards in the Philippines are also internationally recognized. That’s because the Philippines Financial Reporting Standards (PFRS) was adopted from the International Financial Reporting Standards (IFRS).

    The IFRS is used in 168 jurisdictions worldwide. While there are a few differences between each country’s financial reporting standards, many countries follow the IFRS. Therefore, if accountants know the IFRS, they can skillfully adjust to similar reporting standards. 

    Working with a Certified Public Accountant (CPA) from the Philippines ensures compliance with a similar financial reporting standard to other countries. With 200,000 Filipino CPAs, they could fill in gaps within the ongoing global accountant shortage. Their resilience and adaptability make them ideal remote workers for international companies.

    Related: Top 6 Cultural Traits and Values That Make Filipinos Ideal Remote Workers

    High English Proficiency

    Another reason why international companies look for an offshore Filipino accountant is because of their high English proficiency. The Philippines ranks 20th in English proficiency worldwide based on the EF English Proficiency Index.

    Since English is the standard language of international commerce, English proficiency enables smoother working relationships. It’ll be easier to onboard, train, and collaborate with your offshore CPA. Given the technical terms in finance, English comprehension will make compliance much faster.

    Cost Efficiency

    One of the main reasons businesses outsource accounting to the Philippines’ skilled CPAs is because it’s a more cost-efficient strategy.

    The cost of living in the Philippines is in the lower percentile compared to other countries. As a result, the salary cost of outsourcing accounting services to the Philippines is generally lower.

    Its affordability is especially valuable to small or medium-sized enterprises with more limited resources to spend on personnel.

    Table 1: Average Monthly Cost of Hiring a Mid-Level Accountant (in U.S. Dollars)

    AVERAGE MONTHLY COST OF HIRING A MID-LEVEL ACCOUNTANT (IN USD)
    From the Philippines$2,733
    From the USA$6,667
    From the UK$5,167
    From Australia$6,250
    From Singapore$6,250

    Based on the table above, businesses can save an average of 56% monthly if they hire a Filipino accountant. These cost savings can go to other business expenses, like reinvestments, emergency savings, etc.

    See Also: Transparent Offshoring Salary Calculator

    5 Tips on How to Outsource Accounting to the Philippines

    It’s a good idea to know the best course of action before you initiate outsourcing. That’s why we’re covering five actionable tips when outsourcing accounting to the Philippines. Applying these tips will streamline the outsourcing process for your company.

    Choose Between Offshoring and Outsourcing

    When hiring an accountant in the Philippines, decide between offshoring and outsourcing first.

    Outsourcing your accounting tasks gives you little control over the quality of the work. It will also be harder to enforce data security standards. Inconsistencies in scheduling and work deliverables can decrease productivity.

    Outsourced teams also require you to constantly familiarize them with your operation standards. That’s because you don’t have long-term work relationships with them. That might work well for ad-hoc tasks, but not for lengthy projects.

    However, they’re an affordable short-term solution for overstretched finance teams during crunch time. For example, during tax season, a boost from an outsourced CPA can speed up tax filings.

    On the other hand, offshoring is the better option for long-term partnerships, as it gives you more control over the quality of the services you receive.

    Onboarding allows you to create secure work systems with offshore accountants. This solution remains remarkably affordable. Offshoring still gives long-term savings through reduced labor costs.

    These extended collaborations lead to improved financial stability in the long run. Long-term partnerships also enhance synergy leading to consistently higher quality deliverables. 

    Related: Offshoring Explained: Benefits, Drawbacks, and How It’s Different from Outsourcing

    Partner With A Reliable Offshoring Company

    Should you choose offshore accounting services in the Philippines, partnering with a reputable offshoring company is important.

    A reliable offshore company should have a track record of long-term partnerships and multiple success stories. Look at verified reviews to know if an offshore company can give you the right people for the job you’re hiring for.

    Assess and Verify Qualifications

    Ensure you are working with a CPA. Doing your due diligence ensures high professional and ethical standards from your CPAs.  

    If you work with an offshore company, they should verify that the candidate meets these qualifications:

    These qualifications corroborate the validity and expertise of the CPA you are working with. Thus, reputable offshore companies only hire verified CPAs with these accreditations.

    Determine the Accounting Tasks to Outsource

    Before you work with an offshore CPA, finalize which accounting tasks to delegate. The most common offshored tasks are bookkeeping tasks, but there are other financial accounting tasks you can pass on, such as:

    • Auditing
    • Accounts payable
    • Accounts receivable
    • Cash flow management
    • Financial controller tasks
    • Financial data collection and analysis
    • Financial forensics
    • Payroll processing
    • Tax filing and reporting

    It all comes down to which tasks you prefer keeping in-house and those you want to assign to your offshore remote team.

    Secure Your Financial Data at All Times

    The financial sector continues to make significant strides in cybersecurity to protect against cyberattacks. This demonstrates businesses’ need to safeguard sensitive financial data, especially when offshoring.

    Thoroughly aligning your offshore accounting staff emphasizes the importance of data security. You should also include a non-disclosure agreement (NDA) in your contract with your Filipino accountant as legal protection for your sensitive data.

    Ask your offshore service provider about their data encryption and protection measures. It’s for your benefit to be proactive and responsible when it comes to handling financial data. 

    Timely audits help you monitor the accuracy and compliance of your offshore CPAs. Monthly or quarterly financial reports also inform you if there are inconsistencies to flag.

    As you scale your business with your offshore team, it’s important to conduct thorough quality checks. This helps ensure that data security risks are minimized and that nothing goes unnoticed.

    Offshore Accountants: Your Accounting’s Time-Saver and Efficiency Booster

    Working with Filipino accountants is the cost-efficient solution to a growing shortage of accountants everywhere. With their internationally recognized skills, you can confidently assign them to your financial statements reporting. 

    Establishing an offshore accountant team can especially stabilize your accounting process. A team of offshore CPAs is the better choice for companies that value long-term collaborations.
    Remember to work with a trustworthy offshore company when hiring an offshore CPA. They’ll connect you with qualified accountants of all levels. These CPAs will keep your business legally compliant and your accounting data secure. Their presence will not only protect your company but also position it for long-term growth.

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