Onshore offshore accounting operating model

How Hiring Offshore Bookkeepers Can Supercharge Your Finance Department

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Let’s face it – becoming a bookkeeper is not every middle school kid’s dream in America when they grow up these days. Americans have fallen out of love with accounting as a profession. It’s gone from being seen as a secure path to the American dream to a boring job that doesn’t pay enough. America’s dying romance with bookkeeping and accounting is having a real impact on the supply of bookkeepers and accountants nationwide and businesses are suffering because of it..

Almost overnight the US is short 340,000 accountants and things are only getting worse.  In fact the Bureau of Labor Statistics is forecasting demand for accountants to continue to grow in the years to come at a 4% annualized growth rate. So the shortage of 340,000 accountants today could be a whopping shortage of 500,000 by 2032! 

The growing shortage of talent is having two interrelated effects – increased upward pressure on wages and lower retention rates as accountants are aggressively recruited by competitors. A third and even more challenging pain point is that businesses are struggling to find junior talent to fill bookkeeping and junior accounting roles as the number of new accounting graduates has dropped to a meager 65,000 per year.

So how are US businesses adapting? A growing number of American businesses are hiring offshoring bookkeepers and accountants to help plug the gaps in their ranks, increase their output and make sure they can stay on top of their books. Whether you’re a small business, a startup or a large established enterprise the shortage of accounting talent is affecting everyone. However, hiring offshore bookkeepers is an increasingly popular and immediate solution to the long-term problem of America’s shortage of accountants. So what are the top advantages and things to consider when hiring offshore bookkeepers?

Top Advantages of Hiring Offshore Bookkeepers

  • Increased Efficiency: Combine your team of senior finance talent (CFO, Controller) with a team of offshore bookkeepers and accountants to get more from less.
  • Cost Savings: Offshore bookkeepers are in plentiful supply and are as much as 70% cheaper than onshore equivalents
  • Talent Retention is Easier: Globally the competition for accountants is far less than the US making it much easier to retain your offshore talent.
  • Extend Your Working Hours: Take advantage of different timezones for your onshore and offshore team to have your finance team working 10, 12 or 16 hours a day.

The Challenges of In-House Bookkeeping

In-House Bookkeeping: A Burden or Blessing?

As a business grows the complexities of managing your books and keeping them clean grows exponentially. Whether it is correctly filing new transactions or efficiently closing out the books at the end of the month or quarter, having trained bookkeepers and accountants with an understanding of the nuances of accounting is critical for avoiding errors or attracting the ire of regulators. 

If you’re a small business owner the challenges of managing your books can be even greater than larger businesses with more resources. The main challenge of in-house bookkeeping is the need for specialized expertise. Maintaining accurate financial records, managing payroll, and ensuring compliance with ever-changing regulations requires a level of knowledge and experience that many small to medium-sized businesses simply don’t possess in-house. Trying to navigate these complexities on your own can lead to costly mistakes and potentially severe legal consequences. 

In addition, the time and resources required to manage bookkeeping tasks can be a significant drain on your core business operations if you don’t have dedicated finance talent. Employees tasked with bookkeeping responsibilities are often pulled away from their primary roles, leading to decreased productivity and a loss of focus on revenue-generating activities.

Many businesses in the US outsource their bookkeeping and accounting functions to third-party accounting firms. However, these firms are increasingly capacity constrained today as they are suffering from the very same shortage of bookkeepers and accountants nationwide. Similarly, as a business scales the right thing to do is bring your bookkeeping and accounting departments in-house. In-house bookkeepers and accountants are always going to understand your business better than a third-party firm and keep the books more accurate. 

But filling bookkeeping roles in the US is becoming harder and harder by the day. If you look at the median salary of a US bookkeeper it is not hard to see why. As of 2023 the median salary of a bookkeeper in the US was just $47,440 – which is $22.81 an hour. $22.81 an hour is barely higher than California’s new minimum wage of $20 an hour for fast food workers. Given the complexity, judgment and experience required to be an effective bookkeeper, the lack of salary growth is one of the main reasons for the shortage of American bookkeepers. 

The shortage of accounting talent in the US is being felt most acutely by small businesses, small accounting firms and for any business trying to fill bookkeeping and junior accounting roles. For larger businesses with more resources and for more senior accounting roles there is still plenty of talent to fill those roles. But slowly the shortage of talent at junior levels will ripple up to senior levels in time as well. 

While bookkeeping is a critical function to any business, the challenges with doing it in-house and finding bookkeeping talent in the US continue to grow. This is leading to rising demand and interest in hiring offshore bookkeepers to supplement senior onshore accounting talent and enable an efficient finance department.

Increase Your Efficiency By Combining Onshore & Offshore Finance Talent

Bookkeeping is a job that requires human judgment and experience to get right. As your business scales and the number of transactions grow and the complexities of your operations increase you generally need to add bookkeepers to your team even faster to keep up with this growth.

However, the shortage of accounting talent in the US makes this an uphill battle for every single new hire. However, by adding offshore bookkeepers to the mix you can create a new operating model for your finance team that increases output, reduces costs and increases your efficiency. 

Imagine this scenario: you are a midsized business with 3-4 senior finance team members on shore managing your finances at a high-level. In addition to this senior talent you have 6-10 offshore bookkeepers, accountants, AP clerks and more that supplement your senior onshore talent and help do much of the day-to-day finance work that is required to keep the engine running.

This combination of senior onshore finance talent leading a team of offshore bookkeeping and accounting talent supercharges your finance team and can radically increase productivity. This is a more efficient, productive and affordable operating model for your finance team than the old model of having a fully built out finance department onshore. This new operating model is growing in popularity and catching on fast across businesses of all kinds in the US today. 

Take Advantage of Huge Cost Savings by Hiring Offshore Bookkeepers

The chances of hiring bookkeepers today in the US with salaries of just $47,000 a year are falling fast. As competition for finance talent continues heating up amid the growing shortage of talent, the upward pressure on wages is significant. However, offshore talent can swoop in and help save the day. 

In fact, hiring offshore talent can be anywhere from 50 – 70% cheaper than hiring onshore accounting talent today. This means that you could even hire 2 or 3 offshore bookkeepers for the price of one onshore equivalent. These savings can be a gamechanger for a business as inflation continues to push the costs of operating your business up. The core of productivity is making more from less and offshore finance talent can be a huge and affordable productivity unlock for your business. 

Offshore talent savings

Access Top 1% Global Talent & Retain Them Easier

Accounting is a global profession and unlike in the US is still a popular career path for new college entrants from South Africa to India and the Philippines. In fact the Big 4 accounting firms have great brands across much of the world and are sought after employers. 

Globally there are at least 3 million accountants today versus about 670,000 Certified Public Accountants in the US. Hiring only onshore talent in the US means you’re ignoring the huge global pool of accounting talent that is motivated and significantly more affordable. Beyond simply the cost savings, it’s significantly easier to retain offshore bookkeepers and accountants. Other countries aren’t facing the severe shortage and competition for accounting talent that is currently underway in the US. 

It’s also significantly easier and more affordable to pay above market wages to offshore bookkeepers without breaking your bank as a business and while still taking advantage of the 50-70% cost savings that hiring offshore brings. 

Ultimately, hiring offshore bookkeepers and building part of your accounting team offshore is a strategic move for your business that increases your efficiency, reduces your costs and frees up your internal resources to reinvest into driving growth and innovation.

Take Advantage of Timezones for Round the Clock Work

One of the unique advantages of hiring offshore talent in different time zones is the opportunity to have your finance team online and working for more than the regular 8 hour workday in the US. For example, 9am in the Philippines is 6pm PST. So potentially when your team of onshore finance professionals clocks out for the day your offshore team can clock in and keep the work going. 

Extending the number of hours your finance team is online and working daily (without making people work overtime) enables increased productivity, efficiency and closing the books faster every month. In fact, having a team of bookkeepers and junior accountants offshore working during US night hours and overlapping for 2-3 hours with the US workday is the ideal approach when it comes to building an offshore accounting team. The productivity benefits of this approach are unique to hiring offshore talent and are prohibitively expensive to try to replicate with onshore talent. 

What Should You Look For When Hiring Offshore Bookkeepers?

Whether you’re working with an offshore accounting firm or hiring offshore accountants directly there are a couple core factors to keep an eye out for to make sure you find and hire the right caliber of talent to help streamline your books. 

The Right Education and Qualifications

Just like everyone in the US knows what the top universities are for engineering or computer science or the humanities (think Ivy League and top public universities), the same phenomenon exists in every country globally. 

So figure out what are the top universities for finance and accounting in the countries you’re thinking of offshore too? Figure out how to evaluate the profiles of students from these schools and what their strengths and weaknesses are. 

Expertise & Experience

As mentioned, accounting is a truly global profession with bodies like the International Federation of Accountants counting 135 countries as members for example. Similarly, the Big 4 accounting firms also have large global presences. For example PWC has offices in 151 countries and employs an incredible 364,000 people!

There’s loads of highly trained and experienced accounting talent with great pedigree globally. Evaluating the caliber of accounting firms or enterprises a candidate has worked at is critical to evaluating whether they can perform at a high-level and adapt to the unique demands of GAAP accounting the US. 

Affordability 

As with all things, with offshore talent you get what you pay for. If you want to hire a $750 a month bookkeeper somewhere in the world you can find one. But the lower the salary the less qualified and experienced the candidate, the more mistakes they’ll make and the more hand holding you’ll have to do. 

There is a tradeoff between affordability and capability when it comes to offshore talent and figuring out and striking the right balance is critical to having success with hiring offshore bookkeepers and accountants. Generally though you can unlock cost savings of anywhere from 50-70% across multiple different countries globally. 

Communication Skills

Last but not least, effective communication skills are important when hiring offshore bookkeepers. Bookkeeping is a collaborative process between senior accountants and bookkeepers as well as between onshore and offshore talent. Hiring offshore team members that can communicate effectively in spoken and written English is a crucial enabler for building a successful combined team. 

By thoughtfully evaluating these factors, you can find an offshore bookkeeping partner or directly hire offshore bookkeepers that will help supercharge your efficiency and output overnight.

Conclusion: Unlock the Power of Offshore Bookkeeping to Transform Your Finance Department

Offshore bookkeeping is a powerful tool that can solve your recruiting and retention challenges for accounting talent today. More importantly, building a new operating model that combines senior onshore finance talent with offshore bookkeepers and accountants can unlock significant productivity gains and cost savings. While this new operating model requires new approaches for managing offshore talent, the gains can be tremendous.

Starting to build an offshore accounting team also enables you to scale your team and retain them easier over time in less competitive markets. The benefits of offshore bookkeeping are clear – increased efficiency, cost savings, and the freedom to reinvest the time and money you save into your core business activities. 

We believe the marriage of onshore accountants and offshore accountants will unlock huge productivity gains over the next decade.  

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