Everything You Need to Know About Outsourcing Your Accounting and Bookkeeping to the Philippines
With highly qualified accounting professionals in short supply in the US, organizations across every industry are finding it difficult to recruit and retain the talent they need to handle all their accounting and bookkeeping functions in-house. Many are choosing to outsource these essential functions to the Philippines—and they’re seeing great results. You may be wondering how this approach works and what to expect. Read on to learn everything you need to know about outsourcing your accounting and bookkeeping to the Philippines.
- What is Outsourced Accounting and Bookkeeping?
- Why is the Philippines a Good Source for Outsourced Accounting?
- What Benefits Does Outsourced Accounting Offer?
- How Do You Know the Time is Right for Outsourced Accounting?
- What Types of Accounting Services Can Be Outsourced Effectively?
- What Criteria Should You Use When Choosing a Philippines Accounting Provider?
- Why Choose Scrubbed for Outsourced Accounting in the Philippines?
What is Outsourced Accounting and Bookkeeping?
The outsourced model is used in many industries to supplement a company’s internal team, whether ongoing or during seasonal or peak periods. It’s a strategic approach that often proves a competitive advantage, enabling companies to fill hard-to-fill positions and supplement their internal staff.
With the talent shortage continuing to plague US companies—especially in highly skilled, specialized fields—more organizations are turning to the outsourced model for their accounting and bookkeeping.
When your company outsources accounting and bookkeeping, you turn the entire responsibility for staffing those functions to a third-party provider. The provider recruits, vets, interviews, and hires accounting and finance professionals who become employees of their firm. The provider also takes care of everything associated with maintaining those employees, including payroll, taxes, benefits, office space, technology, training and development, and administration.
An outsourced accounting arrangement is designed around each company’s goals, objectives, and situation. Some companies choose to outsource all or a portion of their accounting tasks ongoing; others use an outsourced provider to supplement their internal team during peak times. Regardless of the arrangement you choose, your outsourced accounting professionals will be prepared to perform the same functions and handle the same tasks as an internal accounting staff member would.
Why is the Philippines a Good Source for Outsourced Accounting?
When your company outsources accounting and bookkeeping, you turn the entire responsibility for staffing those functions to a third-party provider. The provider recruits, vets, interviews, and hires accounting and finance professionals who become employees of their firm. The provider also takes care of everything associated with maintaining those employees, including payroll, taxes, benefits, office space, technology, training and development, and administration.
An outsourced accounting arrangement is designed around each company’s goals, objectives, and situation. Some companies choose to outsource all or a portion of their accounting tasks ongoing; others use an outsourced provider to supplement their internal team during peak times. Regardless of the arrangement you choose, your outsourced accounting professionals will be prepared to perform the same functions and handle the same tasks as an internal accounting staff member would.
Reliability is another reason to choose the Philippines for outsourced accounting. The country boasts a modern infrastructure much like you would find in the US, enabled by significant government support. Outsourced accounting professionals here work in modern workspaces, with high-speed Internet, reliable backup power, and other redundancies that ensure business continuity.
Culture and language similarities are another benefit to outsourcing your accounting and bookkeeping to the Philippines. The westernized culture bears many similarities to the US and English is one of the two official languages, ensuring a good cultural match and strong, clear communication. Finally, the low cost of living in the Philippines means you can tap accounting professionals who are just as qualified as those in the US, if not more, at a lower cost. Local companies can pay their employees a salary that supports a high standard of living, while still enabling their clients to reduce their accounting and bookkeeping costs.
What Benefits Does Outsourced Accounting Offer?
The reason many US-based organizations outsource their accounting to the Philippines is simple: This approach offers many tangible benefits, especially in the current labor market.
Relieves Staffing Burdens
Keeping your accounting team fully staffed to meet your needs is increasingly challenging. Labor shortages and high turnover can leave an organization with vacant accounting positions for long stretches. Besides taxing the rest of your team, these lingering open positions can cause you to sacrifice your hiring requirements just to fill roles. And the hiring process itself can be draining, requiring time and energy that takes focus away from your core business. Outsourcing relieves those staffing burdens by turning them over to a third-party provider.
Provides Access to Top Talent
In any labor market, it can be difficult to find accounting professionals with the right experience and expertise to suit your needs. Smaller companies and those in industries with lower pay scales can find it especially tough to compete for top talent. In contrast, outsourced providers in the Philippines find it much easier to attract and retain highly qualified accounting and bookkeeping professionals.
Flexes with Your Needs
Many organizations find their accounting needs ebb and flow throughout the year for a variety of reasons. Nonprofit organizations have peak periods related to their grant cycles. CPA firms face a huge crunch during tax season. Private equity-backed companies must satisfy their investors’ stringent financial reporting requirements, sometimes as often as monthly. And of course, any organization will need to complete annual tax filing and prepare for periodic audits. It’s difficult, if not impossible, to flex up and down to meet those variable needs with a fixed internal team. Outsourcing your accounting to a provider in the Philippines enables you to get year-round support for ongoing needs, along with additional help during peak periods—enabling you to match your resources to your needs at any given time.
Makes Industry-Specific Expertise Easier to Find
Besides core accounting functions that are somewhat standard, most companies have industry-specific accounting needs that require unique knowledge and skills. An accountant for a SaaS company needs to understand the complexities of revenue recognition for businesses with a recurring revenue model, while an accountant in a nonprofit must be well-versed in the financial reporting requirements associated with grants. These are two of the many instances where industry-specific expertise proves invaluable in accounting. Yet it can be tough to find a full-time in-house employee with experience in your industry. Outsourcing to a third-party accounting and finance provider allows you to gain that experience much more easily.
Fills Capability or Expertise Gaps
Some accounting functions are common across companies, such as payroll and accounts receivable, so it’s easier to find talent with this experience. Other needs may be more complex and more challenging to source in-house. Organizations preparing to go out to the capital markets for funding need sophisticated financial models to attract investors. A company that is ready to upgrade its accounting system needs help selecting the right software and overseeing the implementation. Private equity-backed businesses need robust financial data analytics to demonstrate they’re meeting their investors’ expectations. Trying to fill such gaps through your internal team can be difficult, but a third-party outsourced provider can easily supplement your team and bring in those capabilities.
Allows You to Focus on Your Business
For companies that aren’t in the business of accounting, the time and energy spent hiring, training, and supervising internal accounting and bookkeeping staff takes focus away from the core business. Shifting that responsibility to a third-party provider in the Philippines enables you to stay firmly focused on your core business, along with strategic pursuits with a high ROI.
Reduces Staffing Expenses
When outsourcing first emerged as a business model, it was often perceived purely as a cost-cutting measure. While most organizations now recognize there are many other reasons to outsource accounting and bookkeeping, the opportunity to reduce staff-related expenses is still appealing. In many cases, it’s possible to spend less on outsourced accounting than you would hiring a team of full-time employees, especially if those professionals are based in an area where labor costs are low, such as the Philippines.
How Do You Know the Time is Right for Outsourced Accounting?
If your organization faces any of the following situations, it’s highly likely you could benefit from outsourcing your accounting and bookkeeping to the Philippines.
- You have seasonal accounting needs that go beyond the annual tax-filing period.
- You have unique, industry-specific accounting needs that a generalist accountant is unlikely to have experience with.
- You’re planning to raise capital and need investor-ready financials and sophisticated financial models that your in-house team can’t develop.
- You’re in a high-growth mode and are having trouble staffing up to support the associated increase in accounting needs.
- Your business has become more complex, creating new accounting requirements that your internal team doesn’t have the capabilities or expertise to handle.
- You find it challenging to stay in compliance with complex regulatory requirements around financial reporting.
- You have difficulty competing for qualified accounting and finance professionals, leading to high turnover and vacant positions.
- You need specialized accounting services that your in-house staff isn’t equipped to provide, such as audit support, fundraising support, financial forecasting, or accounting technology selection and implementation.
- Your investors expect more sophisticated financial reporting and data analytics than your internal team has the capability to provide.
What Types of Accounting Services Can Be Outsourced Effectively?
Organizations that use the outsourced model find they can outsource a wide range of accounting and bookkeeping functions to a third-party provider with confidence and with strong results. Following is a representative list of accounting and bookkeeping services that many US-based companies outsource to the Philippines:
- Payroll
- Accounts receivable
- Accounts payable
- Bank reconciliation
- General ledger
- Month-end closing
- Purchase-to-pay
- Order-to-cash
- Cost accounting
- Sales tax coding
- Financial reporting and statement preparation
- Accounting system implementation
- Accounting system implementation
- Sales and use tax return preparation
- Property tax return preparation
- Form 1099 preparation and filing
- Financial forecasting and modeling
What Criteria Should You Use When Choosing a Philippines Accounting Provider?
Once you decide that your organization can benefit from outsourcing some or all of your accounting and bookkeeping to the Philippines, you need to find the provider that best matches your needs. Criteria like the following can help you select an outsourced partner that will fulfill your accounting and finance needs effectively:
- Experience with companies like yours, in terms of your size and stage of maturity
- Knowledge and experience in your specific industry
- A highly qualified workforce, including many professionals with Big 4 or Fortune 500 experience and employees who have passed the CPA in the Philippines
- Deep and broad capabilities that match your accounting and finance requirements
- Services that go beyond basic accounting functions, including financial modeling, financial planning and analysis, forecasting, tax planning, and investor readiness
- A thorough understanding of US GAAP and IFRS
- A proven, rigorous approach to hiring and onboarding top accounting and finance talent
- Flexible arrangements that include full-time employees, hourly staffing, and project-based staffing
- Secure, efficient technology that streamlines processes and safeguards data
- Well-documented processes that ensure the highest quality work, delivered on time
- A commitment to smooth, seamless communication, including access to your dedicated team on flexible hours
Why Choose Scrubbed for Outsourced Accounting in the Philippines?
For US-based for-profit and nonprofit organizations that choose the outsourced accounting model, Scrubbed is increasingly the partner of choice.
With headquarters in San Francisco, California and the Philippines, Scrubbed employs over 1000+ highly skilled and highly experienced accounting and finance professionals. Over XX percent of our professionals are CPAs, and many have Fortune 500 or Big 4 accounting experience. Through this qualified team, we deliver a level of service that rivals the Big 4 public accounting firms.
The Scrubbed outsourced model enables US-based organizations to obtain the accounting and finance talent they need, fill gaps in skills and capabilities, handle peak periods with ease, gain industry-specific expertise, and potentially reduce their accounting labor costs. We augment and supplement their internal staff, become an extension of their team, and help them achieve their goals more efficiently and effectively.
Scrubbed works with companies across the maturity lifecycle, from early stage on up, in a wide variety of industries. Our team brings especially deep industry-specific experience in biotech, professional services, real estate, nonprofits, and technology, including SaaS businesses.
After conducting a discovery call, we customize an outsourced accounting arrangement to suit your needs, objectives, and timeline and select the right Scrubbed resources for your engagement. Our flexible outsourcing arrangements include full-time Scrubbed employees, hourly staffing, and project-based staffing.
Your assigned Scrubbed team is fluent in English and uses the same communication methods and platforms your internal team does, including e-mail, Zoom, Microsoft Teams, Google Meet, and Skype, for example. Their typical office hours are 7am to 5pm local time, but they regularly flex to be available for scheduled meetings at their clients’ convenience.
We know what it takes to set up an outsourced accounting relationship for success and make it easy to do business together. For the smoothest startup, we follow a rigorous onboarding process, discuss operational expectations and logistics upfront, and ensure your Scrubbed team has access to all your relevant standard operating procedures (SOPs), methodologies and tools. We also employ highly secure processes for transferring and securing your financial information and provide frequent updates on the status of your work, so you’re always informed.
Why Choose Scrubbed for Outsourced Accounting in the Philippines?
Find out how Scrubbed can help your organization get the accounting and finance talent and support you need to achieve your business goals. Contact us to schedule an introductory call.