In the past, outsourcing was a taboo term in the UK’s accounting industry. However, in the last two decades, the success that giants like Grant Thornton, Barclays, etc., have achieved by outsourcing key accounting responsibilities has made people reconsider the true value of outsourcing financial jobs. The leading firms have been able to cut costs, increase their professional capabilities, and focus more on high-value jobs like consultancy by sending low-value jobs like payroll management, calculating tax returns, etc., to their offshore accounting teams.
Is it time for the UK’s small-scale accounting firms to finally replicate this successful model? Well, they’re already on the way. A recent report revealed that almost two-thirds of the UK’s accounting firms expect to outsource ‘core services’ in the near future. It’s the only way for them to stay relevant in the UK’s super-competitive accounting industry.
Outsourcing – An Inevitable Option?
The sudden surge in demand for financial and accounting assistance (driven by Brexit) is compelling accounting firms to adopt outsourcing faster than they anticipated. New revisions to the country’s payroll and employment laws from the 6th of April 2020 are confusing accounting experts. The long list of amendments to laws regarding work hours, holiday bonuses, etc., is making life difficult for accountants in the UK, especially the ones who work for small-scale firms with limited resources.
As the government keeps nudging businesses to digitize key business functions like filing tax returns, pension enrollments, etc., small-scale accounting firms with limited access to technological devices and manpower are really struggling. Plus, the challenges of recruiting efficient in-house employees are still present. 59% of the UK’s private sector businesses intend to raise salaries to counter their recruitment difficulties.
Small-scale accounting firms can’t afford to take that route. So, offshore accounting partners offer the only viable solution to stay profitable in the long-term. However, outsourcing doesn’t just involve conversing with professionals with thick accents over the phone anymore. Firms must consider geographical gaps, cultural differences, and a host of other factors before they start outsourcing.
Here are the challenges these firms must address if they want to have successful partnerships with offshore accounting teams –
Finding Experienced and Knowledgeable Offshore Accountants
Although accounting equations are known for being complex, when it comes to running accounting firms, one equation is simple – the more knowledgeable your employees, the better quality of work you’ll be able to provide. Unfortunately, the average quality of employees has been dwindling a lot in the past decade, especially for small-scale firms who can’t afford to have aggressive recruitment policies like the bigger players.
So, before venturing into offshoring, accounting firms in the UK must take the time to assess their potential offshore partners’ knowledge and expertise in accounting. An easy way of verifying these criteria is by looking at the accounting bodies of the countries you’re planning to offshore your tasks to.
For instance, if you’re planning to outsource to an Indian accounting team, look for companies that employ chartered accountants from colleges that are certified by the ICAI (The Institute of Chartered Accountants of India). It’s the Indian equivalent of the UK’s ACCA (Association of Chartered Certified Accountants). If your offshore team is led by ICAI-approved accountants, you’re likely in safe hands. The process of Outsourcing Finance Department in UK can be highly advantageous if firms can find these highly-qualified accounting experts.
Also, look for accounting outsourcing companies that have at least five years (or more preferably) worth of experience in providing accounting assistance to firms in the UK. By partnering with such experienced accounting teams, the firms back in the UK can rest assured about the quality of work being produced by these professionals.
Hence, firms shouldn’t refrain from interviewing multiple offshore teams before offering one of them a long-term contract. The ideal recruitment process while pursuing offshore outsourcing companies is to send them tests. If they can complete the tasks assigned to them on time, they can be paid hourly or daily. Jumping into month or year-long contracts is definitely something that accounting firms with no prior experience of outsourcing should avoid.
Addressing Time Zone and Cultural Differences
Another potential challenge that smaller firms may face while outsourcing is communication problems. The offshore accounting team must be comfortable with the work-time patterns of their UK partners. More importantly, they must be equipped with high-quality communication technology and devices.
For instance, partnering with an offshore team with a private cloud network is far better than partnering with accountants who work only on public internet platforms. So, accounting firms in the UK must ensure that their outsourcing partners have access to a wide range of high-end communication options. The offshore teams must also have high-quality data security tools to prevent the theft or duplication of valuable company information.
Lastly, firms in the UK must ensure that their offshore partners are in it for the long run. The offshore accounting team must be open to year-end performance evaluations, daily reviews, etc.
Is it impossible to find accounting firms that meet all these criteria? Absolutely not! Accounting firms in the UK simply need to do their research before signing any long-term contracts!