Offshoring tasks has brought small CPA firms several benefits over the past few years. But as much as enterprises enjoy the benefits, there are complexities and challenges, and monitoring is one of them.
There has been an increased sophistication in the technology used, the innovations made, and the advantages provided. With the addition of tax and compliance regulations and the ever-changing legislation in the US, it has become all the more important for offshore firms to keep up.
While all of these might be considered great for the modern accounting market, there is an undeniable risk involved. And that is why, it is important to see all the available opinions before outsourcing your accounting and financial jobs.
Several small accounting businesses hit obstacles, get tangled in the cobwebs of technical jargon or just get it wrong because of the lack of right planning, advice, and gaps in monitoring often lead outsourcing to fail.
According to Deloitte’s report, most businesses fail at offshoring because of one of the following reasons:
- Lack of adequate planning and management of the outsourcing process
- Inability to establish an effective governance process
- Incompetence in managing legal risk
- Lack of control over the activities
Common issues in Offshoring:
Analyzing and selecting the right offshore partner is just the beginning of ensuring success in accounting. Some of the common pitfalls small CPA firms run into include:
- Discrepancy in expectation: This issue can arise when there has been a gap in communication or if there have been too many people involved in sharing the training. Whatever the expectation is, should be clearly communicated to the offshore team right at the beginning.
- Inadequate training in transition: Small CPA firms often underestimate the value of proper training and guidance. The initial period of engagement is critical and it needs to be well structured.
- Clear communication: Most errors happen when there is a lack of communication. This can be either from the small CPA firm’s side or on the offshoring partner’s side. Communicating clearly and frequently is key in making sure there are no confusion and discrepancies.
- No method of monitoring: Most small CPA firms do not have a proper method of monitoring in place, which results in incorrect or inadequate information. This, in turn, leads to incorrect decision-making.
In this article, we will talk about handling the issue of monitoring for offshoring firms.
Monitoring the offshore partner: Measures exclusively for small CPA firms
Constant monitoring and analysis can help small CPA firms take adaptive measures in the right direction before it is too late. These small-size accounting businesses should tailor personalized offshore oversight measures that suit their business model. As a business owner, it is important to know that one size never fits all and the oversight strategies should be tailored to meet the specific needs.
Besides the internal strategies, there are several offshore regulations levied by the state and central governments. The offshore regulations in the US are moving towards a performance-based approach. To have these regulations in effect, there needs to be an adaptable approach that helps reduce risk and encourages the use of tools that evaluate and monitor meaningful performance.
Here are some of the top monitoring approaches that work for small CPA firms:
- Client-centric oversight: For small CPA firms to succeed in offshoring, they need to regularly seek feedback from their clients about the services provided by the offshore team. With such feedback, the teams can identify areas of improvement and ensure constant progress and client satisfaction. Make sure to share detailed records of client interactions with the offshore team. Help them understand the gaps and provide training if needed.
- Task-centric oversight: Your offshore team is answerable to you about the number of hours spent on a specific task and the dedication of a resource towards your jobs. Implement a task tracking and management software that allows you to monitor the advancement of a project or tasks assigned to the offshore team. Task completion, deadlines, time taken and even the quality can be easily tracked using these software. Another essential part of maintaining the quality of the jobs done is through audits. Conducting audits of tasks in a specific frequency helps the CPA firm gain information on the accuracy, compliance, and alignment with the firm’s standards.
- Compliance-specific oversight: Accounting, as a field, needs the undivided attention of your offshore team’s resources. Conducting regular and timely audits helps assess the accuracy, competency, adherence to the industry standards, and compliance with the regulation. Audits also help teams gain insight into the areas of improvement and the need to conduct a training process. Every country that you outsource your tasks to has a different compliance requirement and it is important for offshore teams and businesses to abide by them. Make sure to check for legal loopholes and ensure there are no errors made in the process.
- Performance-specific oversight: A resource or a team works best when they have measurable indicators. A small CPA firm must specify the relevant KPIs. This should be inclusive of metrics like productivity, accuracy, and time taken to achieve deadlines. The offshore team needs to provide regular reports to make sure they abide by the established KPIs. Make sure to keep the report comprehensive and include details of performance, challenges faced, and the areas of improvement. This will also help the offshore team work on their weaknesses and elevate their strengths.
- Collaboration-specific oversight: For small CPA firms, it is important to constantly stay in touch. Video conferences, teleconferences, emails, and phone calls are some great ways to discuss project updates, address concerns, and build a strong working relationship. For this purpose, project management tools and software, shared repositories and servers, and communication platforms enable effective and real-time communication.
- Legal and compliance oversight: The rules and compliance around accounting are constantly evolving. It is advisable that small accounting firms seek legal counsel to understand the complexity of international laws around offshoring. All you need is to make sure that the offshore team remains compliant with all relevant laws and regulations.
- Periodic on-site visits: While it is okay to rely on your offshore team to get your work done, it is important to stay connected and make the team feel included. Periodic visits to the offshore team’s office allow a closer look at the operations and a deeper understanding of the offshore team’s culture, environment, and commitment.
Ensuring Personalized Offshore Oversight
While this may seem to be a long process, an oversight on the offshore team is extremely crucial. Geographical barriers and cultural differences play a crucial role and to overcome them swiftly, it is important to manage and oversee them using the right strategy. Monitoring is a continuous and dynamic process that allows adjustments and improvements.
Need more information about offshoring. Write to us connect@finsmartaccounting.com
Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
