Accounting outsourcing is a strategic move for Canadian firms that are experiencing talent and skills shortages, as it can expand their capacity to deliver quality service to clients, all while staying within their budget.
This is in fact true for Canadian organizations facing higher-than-usual inflation rates. According to Trading Economics, the current inflation rate in Canada is 2.6% — the highest in eight months, sharply above market expectations of 2.2%, and ahead of the Bank of Canada's forecast of 2.5%. This economic scenario has prompted various firms to find the right solution to this current concern.
One of which is outsourcing some of their tasks, especially their finance and accounting functions, to fight off the inflation rates.
The article covers:
a. What is outsourced accounting?
b. Why Should Canadian Firms Consider Accounting Outsourcing
c. What to look for in an Outsourcing Provider?
d. What Makes the Philippines a Great Choice for Accounting Outsourcing?
By definition, accounting outsourcing is when an external service provider delivers you with a certain level of accounting support. This goes beyond just adding more staff, as it provides flexible and skilled options that save money for your organization.
For accounting firms and other professional services firms, accounting outsourcing can act as an extension of your firm. This means that outsourced accountants can give your in-house team the necessary admin accounting support — giving your firm the ability to meet the requirements of your growing clientele.
There is a long list of reasons that accounting outsourcing has in store for Canadian firms, some of which are important in today’s challenging economy such as the rising labor and the ongoing shortage of skilled accountants. To make the right business decision, you must first consider both the benefits and potential challenges of outsourcing.
Below are some the key advantages of accounting outsourcing for Canadian firms:
Let’s face the fact that it’s hard to get and hire the right people nowadays due to different factors.
According to the Chartered Professional Accountants of British Columbia (CPABC) the growing demand for Certified Public Accountants is caused by two notable factors.
British Columbia is experiencing a rapid increase in its aging population, leading to a need for CPAs to replace retiring professionals. This demographic shift has put pressure on organizations to find qualified individuals to fill these vacancies.
Several other industries, such as the banking and tech sectors, are competing for quantitatively minded professionals. Often, they offer higher compensation than accounting firms, which causes the decline in qualified accounting candidates.
As a result, the shortage of CPAs in the workforce hurt existing employees, resulting in increased responsibilities, burnout, and limited organizational growth.
Hence, in response to the growing talent shortage, one solution that has proven effective is accounting outsourcing, since they have a more proactive approach to attract and retain CPAs. These measures are:
This benefit can help Canadian organizations overcome the challenges posed by the talent shortage in the accounting industry and ensures the sustainability and growth of their organizations.
A top concern across all industries is data security, especially within the financial sector, which is highly susceptible and vulnerable to breaches. Fortunately, the advancements in modern accounting technology have now made outsourcing safer. Cloud accounting software such as QuickBooks and Xero, for example, comes with advanced security features.
As a result, many organizations now entrust their accounting tasks to outsourcing providers that prioritize security as their utmost concern. When choosing an accounting outsourcing service provider, it is essential to ensure that they understand the sensitivity of financial information and implement stringent data security measures to safeguard client data.
Outsourcing accounting providers should have strict implementation of internal data security protocols to prevent unauthorized access. They must also have regular training sessions and workshops to educate accountants on best practices in data security. This ensures they are well-informed and cautious when handling confidential financial information.
As mentioned above, the inflation rate in Canada is high so maintaining an in-house accounting department can be quite costly – from hiring and training staff to investing in accounting software and technologies.
Hence, organizations can benefit from exploring different cost-saving opportunities to fight off the inflation rate — and in many cases, they're finding that outsourcing accounting functions is significantly less expensive and creates real- deal opportunities.
A team of dedicated experts with specialized knowledge and experience in the finance and accounting field can ease the headache and burden of many Canadian organizations.
Established outsourcing providers possess sufficient experience and expertise in various accounting niches and industries. At the same time, they also have the ability to bring a brand new and fresh perspective to your organization, provide - unbiased insights that challenge existing assumptions and offer alternative viewpoints — all of which leads to improved decision making and innovative solutions.
Bookkeeping, tax compliance, and financial reporting are essential in sustaining an organization’s financial health, but they can be time-consuming at times. And for growing organizations, these tasks can limit their ability to focus on core competencies that directly contribute to revenue and growth.
Hence, many organizations not only in Canada have found it valuable to outsource these tasks to a reliable outsourcing accounting firm. Doing these can free up their valuable time and resources, allowing them to focus on what really matters - running and expanding their business.
As your organization grows, so do your accounting needs. As we all know, scaling an in-house accounting department can be quite complex and costly, especially in the midst of higher inflation rates.
However, one attractive solution that allows many organizations to have flexible and scalable solutions is to outsource their accounting tasks.
Outsourcing allows them to adjust the level of accounting services to accommodate their organizational needs, whether they require additional support during peak seasons or need to downscale during slower periods.
These reasons are something that many organizations are considering as accounting outsourcing provides the necessary resources and expertise to meet each organization’s specific requirement.
Despite its advantages, outsourcing is not without its drawbacks. Here are some potential challenges to keep in mind:
One major challenge you may encounter when working with an offshore provider is cultural and language barriers. These differences can make communication difficult and lead to misunderstandings.
Hence, when you outsource, it’s important to do your due diligence and ensure that your provider has a strong understanding of your organization’s operations and requirements so that they can provide the best possible service to you.
Another challenge is that the time zone difference between your organization and the outsourced provider may cause delays in communication.
This can be especially problematic if you need immediate assistance or have an urgent request. This is why it is highly recommended to establish clear communication protocols before starting your outsourcing engagement and choose a provider that has a team of experts who are available 24/7, so that you can get the help you need when you need it.
Doing this will also ensure that both parties are on the same page and can quickly resolve any issues that may arise in the long run.
In our previous blog, we mentioned that if you outsource your accounting needs, you're giving some control over how things are done. This can be a good thing, as it allows you to focus on other aspects of your organization
However, if you're not careful, this lack of control can also lead to problems down the line. For example, if your provider doesn't have the right software or tools in place to handle certain tasks, then there may be delays in getting things done.
This is why it's important to choose a provider that has experience of working with companies like yours and can provide references from previous clients who were happy with their services.
Lastly, different outsourcing providers have different levels of compliance with local laws and regulations. If you're outsourcing to a company that's based in another country, then it's important to make sure they're aware of any legal requirements in your area.
Failing to do so could result in hefty fines or legal complications for your organization. To avoid this, choose a provider that knows the laws well and make sure to regularly review their adherence to industry standards.
Now that you are aware of the pros and cons, the next step is to understand what factors to consider when choosing the right outsourcing partner to deliver the right services to your organization:
The first thing you should look for in an outsourcing provider is experience. You want to work with a company that has been around for a while and has a proven track record of success. This will ensure that they know what they are doing and can deliver results on time, every time.
Another thing you should look for in an outsourcing provider is the quality of their services. This can be determined by checking their track record, reading reviews from previous clients and talking to current ones.
You should also ask them about their processes and how they ensure that they deliver high-quality work every time.
If possible, you may try to get some references from past clients so that you can speak with them directly about how well the provider performed on your behalf.
One of the most important things to look for in an outsourcing provider is their communication skills. You want to work with a company that is easy to get in touch with and will respond quickly when you have questions or concerns. This will help ensure that your project stays on track and that everyone involved knows what needs to be done at all times.
When you’re looking for an outsourcing provider, it’s important to find one that offers flexible price points. This will allow you to choose the option that best fits your budget and needs. Some companies may offer a flat fee while others may charge by the hour or project. It’s important to know what you’re getting into before signing any contracts so that there are no surprises down the line.
If your organization is on the verge of offshoring your accounting tasks or services to another country, then below are some of the reasons why the Philippines should be your top choice.
The Philippines has a large population of English speakers, which makes it easy to communicate with your outsourced team. This is especially important if you're outsourcing accounting services to a country where English isn't the first language.
The cost of living in the Philippines is much lower than in many other countries, which means it can allow you to reduce overhead costs while ensuring that your offshore team receives a fair wage.
The Philippine government actively encourages the growth of the BPO industry by offering various incentives through agencies like the Philippine Economic Zone Authority (PEZA) and the Bureau of Investments (BOI). These benefits include both financial and non-financial support for registered outsourcing firms.
To further attract international investors, the government continuously works on enhancing the country's infrastructure. Additionally, the establishment of the Department of Information and Communications Technology (DICT) ensures that the outsourcing sector’s technological and communication needs are met.
Lastly, Filipinos are well known for their hospitality and strong work ethics, making them highly attractive to foreign companies. They are skilled professionals who can easily adapt to different cultures and work environments.
In fact, the 2028 IT-BPM Industry Roadmap by the IT & Business Process Association of the Philippines (IBPAP) states that the country produces around 850,000 college graduates every year. Many of these graduates enter high-demand industries, further strengthening the Philippines' position as a leading outsourcing destination. If you want to learn more, you can read this article
Accounting outsourcing is indeed a strategic move and a game-changer across different industries, especially when fighting off inflation rates in countries like Canada.
Organizations should consider the reasons mentioned above to go and try accounting outsourcing, particularly in low-cost nations such as the Philippines. By doing so, they can not only benefit from their outsourced team’s expertise but also save significant time and overhead costs.
Consider working with us. D&V Philippines has been in the industry for over a decade and focuses on bringing the best accounting services to our clients.
We only offer accounting-related services to strengthen our expertise in the industry. When you choose to outsource your finance and accounting function to us you can trust that you are in capable hands. Schedule a free consultation with us today.
You can also read testimonials from our client or download our whitepaper, Finding the Right Talents: D&V Philippines Solutions for Modern Accounting Firms, to learn how our dedicated team of experts undergoes rigorous training to stay ahead of industry standards, ensuring that you receive nothing less than the best quality service.
This post was first published on 02 February 2024 and edited on 14 April 2025 for relevancy and comprehensiveness.