The Pros & Cons of Offshoring Bookkeeping

When offshoring first reared up in the Bookkeeping Industry in Australia it was a Hard NO from me. But we were just going through getting Bookkeepers qualified and registered as BAS owners, a move which I personally feel really helped the Industry. Now almost 2 decades in my opinion may be a bit different, so let's have a little discussion on the good and the bad of it.

The Pros of Offshoring Bookkeeping

1. Cost Savings

One of the most significant advantages of offshoring bookkeeping is the potential for substantial cost savings. Hiring offshore bookkeepers often means accessing skilled professionals at a fraction of the cost of hiring locally. This can free up funds for other critical areas of your business. We all know wages are very high in Australia and also a signigicnt cost to SME’s already so I completely understand businesses trying to lower this cost. There are reasons by Bookkeepers need to charge as much as they do in Australia which will come up further down in our Cons.

2. Access to Expertise

Offshore bookkeeping firms often have a pool of highly trained professionals who specialize in various accounting software and practices. This can provide you with access to a level of expertise that might be cost-prohibitive domestically. I mean don’t get sme wrong I am not 100% sold on a CPA doing your bookkeeping for a few other reasons BUT these off shore teams are client focussed they are really good at landing you as a customer and keeping you and part of that is being or accessing experts for your needs.

3. Scalability

As your business grows, so do your bookkeeping needs. Offshore services offer flexibility, allowing you to scale your bookkeeping operations up or down as required without the hassle of hiring or letting go of staff. It is hard for many SME’s to navigate the legislation around casual versus permanent staff and staff versus subcontractors in Australia having an offshore team can clarify this for SME’s quite readily

4. Focus on Core Business Activities

By offshoring your bookkeeping, you can free up valuable time and resources, allowing you to focus on what you do best—growing your business. This can lead to increased productivity and a sharper focus on strategic goals. The offshore teams doa bit of Customer Care so there seems to always be warm fuzzy involved with them as well.

5. Round-the-Clock Service

With offshore teams often located in different time zones, you can benefit from round-the-clock service. This means faster turnaround times for your work and the ability to address bookkeeping issues promptly.

The Cons of Offshoring Bookkeeping

1. Communication Challenges

Working with an offshore team can sometimes lead to communication issues due to time zone differences, language barriers, and cultural misunderstandings. Clear and consistent communication channels are essential to mitigate these challenges as well as open mind and patience if you are prepared to overcome this challenge.

2. Data Security Risks

I have always had concerns on how the Offshore Teams keep data secure and private so its crucial to ensure that the offshore firm adheres to stringently to YOUR security protocols and complies with relevant data protection regulations. Consider making this a contractual obligation / KPI for them?

3. Quality Control

Maintaining the quality and accuracy of bookkeeping can be challenging when working with an offshore team, again making them comply to your monitoring and quality checks weouod be advisable. As of August 1st 2024 BAS agents will need a quality control system so this may shake the offshoring model a little.

4. Dependence on Technology

Offshoring bookkeeping requires a reliable technological infrastructure, so while issues with internet connectivity or software compatibility can disrupt the flow of information and impact the efficiency of your bookkeeping processes can put this on the Con list I personally also see it as a pro as well. I love software and Technology so this makes me work smarter not harder and so should your business

5. Loss of Local Knowledge

Offshore bookkeepers may lack an understanding of specific Australian tax laws and regulations. And this is my biggest con. Bookkeeping in Australia has become more expensive because most bookkeeping is done by BAS agents in Australia. BAS agents need to be expensive to cover their investment in their education; BAS agents need a Cert IV as minimum formal education, their ongoing Professional Indemnity Insurance, the ongoing membership to a professional association, adequate Professional Education each year and now a quality control system. This is mandated by legislation of Australia so if you are using and Australian BAS agent they should have factored all that into their fee….

Making the Decision

Deciding whether to offshore your bookkeeping is a significant decision that should align with your business goals and operational needs. Weighing the pros and cons carefully will help you determine if offshoring is the right strategy for your business. If you choose to proceed, selecting a reputable offshore provider with a strong track record and robust security measures is essential.

In conclusion, offshoring bookkeeping can offer considerable benefits in terms of cost savings, expertise, and scalability. However, it's not without its challenges, including communication hurdles, data security concerns, and potential quality issues. By carefully considering these factors, you can make an informed decision that best supports the growth and success of your business.

Happy Bookkeeper Hunting