By now, many companies have tried offshoring accounting operations, and it has become a common practice. The appeal of reduced costs and access to a global talent pool is hard to resist. However, due to the complexity of offshoring – especially for property accounting – many companies end up reverting back to onshore teams. Although offshoring costs appear lower on paper, those savings can quickly evaporate.

But there is a way to make it work. It starts with understanding the common problems that derail offshoring and knowing how to get things back on track.

1. Communication Barriers

One of the first hurdles companies encounter when offshoring is communication. Language barriers, cultural differences, and time zone misalignments can lead to misunderstandings, delays, and errors. When dealing with something as precise as financial reporting or tax compliance, even small miscommunications can result in costly mistakes.

How to manage this:

  • Invest in clear communication channels like video calls or messaging apps that support real-time communication.
  • Set overlapping working hours to allow for more immediate and productive conversations.
  • Appoint a liaison with expertise and strong interpersonal skills to identify and address communication gaps. This could include arranging training in areas like cross-cultural communication and language.

2. Compliance with Local Regulations

Accounting is deeply rooted in regulations, and financial practices vary from country to country. A significant challenge in offshoring accounting is ensuring offshore teams stay up-to-date with your home country’s tax laws and reporting requirements.

How to manage this:

  • Work closely with a team of local experts who have strong knowledge of your country’s accounting standards.
  • Ensure your offshore team has access to ongoing training in these regulations.
  • Implement robust review processes with local oversight to catch compliance issues early.

3. Data Security Concerns

Sensitive financial information, such as payroll data, tax filings, and bank account details, is often handled by accounting teams. Offshoring introduces the challenge of maintaining data security across borders, especially if the destination country lacks strict data protection laws.

How to manage this:

  • Use secure, encrypted platforms to transfer and store financial information.
  • Require strict adherence to data privacy protocols and conduct regular security audits of the offshore team’s processes.
  • Ensure your offshore partners comply with international data protection standards, such as GDPR or similar regulations.

4. Quality Control and Accuracy

Maintaining the same level of accuracy and quality in offshored accounting can be tough. Differences in accounting practices or oversight errors can lead to inconsistencies in financial reporting.

How to manage this:

  • Create detailed Standard Operating Procedures (SOPs) that clearly outline your expectations.
  • Implement a dual-check system where an onshore counterpart or experienced manager reviews the offshore team’s work. If your current staff doesn’t have the bandwidth, you can outsource this oversight to an onshore team like Lynx, allowing you to benefit from less expensive offshore resources without compromising quality.
  • Encourage collaboration between teams so offshore staff feel comfortable asking questions or seeking clarification.

5. Team Morale and Engagement

Offshore teams often feel disconnected from the main business due to physical distance. This can lead to lower morale and reduced engagement, ultimately affecting the quality of their work.

How to manage this:

  • Provide opportunities for professional development and leadership roles to keep offshore teams motivated.
  • Schedule regular check-ins to ensure they feel supported and part of the broader company culture.

6. Time Zone Differences

Time zone differences can sometimes work in favor of continuous operations, but they can also create bottlenecks when immediate answers are needed. Momentum can be lost when your offshore team is signing off just as your local team is logging on.

How to manage this:

  • Establish a clear process for handing off tasks between time zones to minimize delays.
  • Use project management tools to track the status of ongoing projects and ensure transparency for both teams.
  • Assign team members who can overlap their work hours to handle critical tasks promptly.

Next Steps

Now that you’re aware of the potential challenges and have some ideas on how to address them, the next step is to create an effective transition plan. In addition to tackling the barriers to successful offshoring, the plan should consider which mitigation strategies are best suited for your company and your offshore team. You’ll also need to handle logistics, such as ensuring your offshore team receives proper training and identifying who on your internal team will serve as a liaison with the offshore team.

Once you have a plan in place, implementing it will require some upfront heavy lifting. This will involve project and change management specialists – ideally with accounting expertise – to ensure the transition succeeds.

While there may be higher upfront costs to make the switch successful, this investment is necessary to make offshoring work – and to turn the potential cost savings into a reality. To get it right, you’ll need a partner like Lynx Systems, who can help set you up for success from the start.

Our team of expert accounting, project, and change management professionals is ready to help you navigate the complexities of offshoring your accounting operations. If offshoring isn’t the right fit, but you’re interested in outsourcing to an onshore resource, our top accounting professionals can assist with that too.

Get in touch to find out which solution will work best for you.