6 Key Outsourced Accounting Challenges (And How to Overcome Them)

March 18, 2024 Theresa Rex

cfo thinking about potential outsourced accounting challenges

As more organizations prioritize support for the finance department with virtual solutions, finance leaders are tasked with anticipating – and rising – to meet potential accounting outsourcing challenges along the way.

As with any major implementation in business, an ounce of prevention – whether it takes the form of myth-busting or vendor selection – is worth a pound of cure, which can, unfortunately, take the form of switching vendors completely.

Luckily, another thing that's rising in parallel to the value proposition of a virtual accounting support solution is the information that's readily available about how to stick the landing. Knowing what to look for in a vendor, understanding common misconceptions about outsourcing in general and being clear-eyed about what to expect can all help you overcome your accounting outsourcing challenges before they ever have a chance to take root.

These are 6 of the most common challenges:

Building Your Solution

accounting team looking at reports

Determining the Scope of Your Solution

Before we tackle the common misconceptions and potential pitfalls that first-time outsourcing clients often run into, it's important to address the fact that when it comes to virtual accounting support – there's no such thing as one-size-fits-all.

A rapidly-scaling startup is going to have different transactional support needs than a globally established company with a complex arrangement of business units, which in turn will need something different than a private equity player that's working with a slew of portfolio companies. Even if each of these companies needs Accounts Payable support, the scope of that support is going to vary widely.

Download: Outsourcing Implementation: The Definitive F&A Decision Matrix [WORKSHEET]

Overcoming scoping challenges can be tricky, but it has the benefit of being one of the first things you have to knock off of your punch list at the outset of implementing a solution like outsourcing. Leadership will have a clearer idea of the solution a vendor can offer or build for them will encompass when they:

  • Identify Objectives and Key Results (OKRs) and weigh them against present Key Performance Indicators (KPIs)

  • Identify areas of organizational knowledge for capture, standardization and documentation

  • Tally up the hours teams spend on accountancy work outside of their respective established roles

  • Identify chronic resource shortages in human capital within the organization

Transparency in the Relationship

Business executive analyzing financial results

Combat Outsourcing Challenges by Keeping Unrealistic Expectations at Bay

One reason we here at Personiv are so adamant about being a transparent outsourcing partner is that we understand how frustrating it can be to find yourself in one-half of an ill-fitting vendor-client relationship in a contract that promised much but isn't gaining the traction you were expecting.

Vague promises of cost-containment that gray-boxes the actual numbers attached to hiring offshore accountants are one culprit of unrealistic expectations in virtual accounting support relationships. The murky assurance that you will "save money" is not enough information for finance leaders to go on when launching a new strategy. By having a clear understanding with your virtual accounting partner up-front, you can avoid surprises later.

Other accounting outsourcing challenges arise when clients feel abandoned after the contract is signed – the result of enthusiastic sales professionals treating each prospect as the perfect fit when the reality is that a customized solution would serve them better. The best way to keep unrealistic at bay requires demanding two things: transparency and tangibility.

Download: Virtual Accounting Talent Toolkit [INTERACTIVE]

  1. Transparency is fairly straightforward: providers should be able to provide you with specific costs, timelines and expectations before you sign a contract. They should be upfront about whether there are minimum hiring requirements, for instance, or whether you will need to purchase an additional suite of software or ERP module instead of using your own. Hint: using a technology-agnostic provider removes this challenge entirely. Information about their cybersecurity protocol and certifications will be up-to-date and easy to access.

  2. Tangibility means that potential vendors can provide proof of their past ability to provide results and codification of the way forward for your organization and brand. These may come in the form of references, case studies, signed a service-level agreement that include metrics and pilot programs. Proof and codification – they will show that they can do what they promise and they will outline how they will do that for you.

The bottom line? Make sure that everything is out in the open. The goals should be right there in black and white. The client should be allowed to see what a realistic solution looks like, what it costs and whether it works for them – all before they sign a lengthy contract. Any adjustments in team size or goal metrics should also be made collaboratively and on an ongoing basis.

Download: Outsourced Accounting Cost-Savings Calculator [INTERACTIVE]

This kind of partnership is anathema to unrealistic expectations in the outsourcing process because they simply never have a chance to develop.

Culture Fit & Outsourcing Control Challenges

call center representative talking about outsourced accounting challenges

Maintaining Control of Project Management & Company Data

Some first-time outsourcers go into the virtual accounting experience with fears of low quality, mismanagement and a loss of process control. The good news is that by choosing the right provider, you can avoid these issues entirely. Look for a provider that strives to know the ins and outs of your business, culture and processes as well as you do while demonstrating that they can introduce talent as seamlessly as possible into those three things.

Ideally, you will find yourself with a provider that you trust enough to not have to constantly supervise while still giving you the opportunity to have the control you need to ensure that operations run smoothly. You should be able to provide the direction, while your provider manages the day-to-day.

Your virtual accounting provider should be able to demonstrate – over and over again – that just because you are spending less of your valuable time on general ledger rework and supervision, you don't have to accept less control of those same processes.

Early on, this may mean frequent – even daily check-ins and 'hypercare' calls – that include you, your stakeholders, someone on the provider's team that can act as an advocate for you as you get to know your new virtual talent, your actual virtual team and anyone else you want to include.

Gradually, many good partnerships result in direct-access relationships between stateside and virtual talent that are mutually respectful, accessible and as natural as if you were all in the room together.

Offshore Team Accessibility

virtual accounting team working across time zones background

Working Across Time Zones With a Dedicated Virtual Finance & Accounting Team

Imagine a single room with all of your in-house and virtual talent working together. It seems impossible that your U.S. team could have that level of access to talent around the world, but with global teams working U.S. timezones, offshore remote work is easier than you might think, making this challenge a non-issue.

Many first-time outsourcers worry that they'll be fielding phone calls in the middle of the night, especially early on, by new global teammates. They wonder if and how they'll be able to maintain the deadlines that are crucial to the flow of business if they suddenly have to navigate 10-, 11- or even 12-hour time differences. What if something urgent comes up, or a significant issue arises, but it's well past 1 a.m. "over there"? However, when you accounting team (as small as one to two accountants) works nights in say, the Philippines, their working hours align perfectly to the U.S.-time zones.

Part of the appeal of implementing a virtual accounting solution is that it's virtual. It leverages the "anywhere, anytime" connectivity that the Internet promises and benefits from access to talent markets that could be as close as next door or as far away as the next hemisphere.

Part of the reality of providing a virtual solution means offering it at the time that is most convenient to the people taking advantage of that solution. The support you receive will fortunately be on your own schedule. That might mean you need someone who is plugging away on accounts receivable entries while your team is out of the office so that you can review them first thing in the morning.

It's more likely that you will need your virtual team to work when you do. That's not just feasible – it's actually the norm. Reputable providers offer competitive shift differentials and make quality of life a priority for global workers to ensure that everyone is seeing the maximum benefit of a fully virtual accounting solution. Top destination cities with hot accountancy markets are flooded with entrepreneurs and well-known corporations that are happy to compete for the business of virtual accountants taking a 3 a.m. coffee break or post-shift spin class.

So, you can rest easy. If the phone rings in the middle of the night, it won't be your virtual accountant on the end of the line – unless that's your preference.

Language & Culture Compatibility

multiracial company in culture compatibility session for team engagement

Overcoming Language Barriers & Solving Educational Disparities

Another challenge that's actually more of a misconception: language barriers or a lack of understanding of U.S. accounting standards and procedures. Let's tackle this one. A virtual talent market is a global one, which means that you can hire everything from a General Accounting Clerk up to a Controller that lives halfway across the world from you.

Yes, they may speak a different language as well as your own, and yes, they may have attended a university in a country you've yet to visit. It doesn't automatically follow that there will be a language barrier, or that they are less educated than a stateside counterpart. Depending on the destination country your provider works with, the exact opposite is often true.

Take the Philippines, for example, where a full 92 percent of the population is fluent in English – often with an accent Westerners can barely detect – the most popular sport is basketball and accountants follow U.S. GAAP. In cities like Manila, if you happen to be looking for a CPA to hang out with, it won't take you long to find one that has Big Four experience and knows which restaurants in Alabang serve the most authentic French cuisine.

Download: Destination Manila: Why Outsource Accounting To The Philippines [INFOGRAPHIC]

Like the U.S., the Philippines has a long history as a melting pot of cultures, languages and ethnicities. And, like the U.S., English is ubiquitous, college acceptance season is competitive, the teens love TikTok and water cooler talk (now virtual, of course) includes swapping Netflix suggestions and March Madness chatter.

It's much more important to look for a provider that has a corporate culture similar to your own than it is to look for a societal cultural clone. Prioritizing compatibility over conformity will go a very long way to overcoming accounting outsourcing "challenges" like this one.

What's important to you as an organization? How do you engage your employees? What are your goals? What are your challenges? When you find a provider with answers to these questions that align with yours, you've found your match. The result? You'll have access to talent that's as educated, qualified and dedicated as the talent in your home city. It's just much more likely that they'll be bilingual.

Compliance & Security

ceo auditing and looking for outsourcing accounting challenges

Navigating Accounting Outsourcing Challenges in Compliance, Regulations & Security

All of that said, there is one aspect where a virtual accounting provider and their client must be in absolute lockstep: compliance, regulations and security.

Even stateside, this can be tricky and keep many finance leaders up at night. The rules are often changing and the penalty for getting it wrong can be high. It's true of every industry, but luckily there is a strategy to overcome accounting outsourcing challenges that threaten to put you on the wrong side of HIPAA or ERISA.

A provider with U.S.-based management that offers a collaborative approach to risk is instrumental to clearing this particular hurdle. Providers already adhering to the same laws and operating within the same regulatory infrastructure as you are will be the ones best positioned to help you stay on the right side of ever-changing compliance measures.

They will also be more likely to understand the need for a collaborative risk management approach and have a mutual interest in your shared compliance.

In terms of security, the importance of a strong physical and virtual security protocol cannot be overstated. Your company data is your most valuable asset and you need to ensure that your provider can care for it as you do, and keep it safe and secure.

Biometric entrances for employees and secure areas for accountants to work are a good place to start. Ensure that your provider has 24/7 video monitoring and security on-site while they also carry top certifications that do routine checks on the security of their data. Standard certifications such as as ISO can give you piece of mind that your company data will never fall into the wrong hands.

Read More: Data Security While Outsourcing - How to Ensure Your (And Your Clients') Data Is Safe

Here's The Key To Overcoming Your Accounting Outsourcing Challenges

accounting outsourcing company working on fixing some challenges in office

Your provider.

You probably already noticed that theme throughout this article, but it bears spelling out: your outsourced accounting solution will only ever be as good as the provider you hire to build it with you.

Download: Virtual Accounting Vendor Comparison Spreadsheet [INTERACTIVE]

Keep the concept of "partnership" at the forefront of your strategy. Look for someone who is invested in your success as you are, has a history of legacy relationships in the industry, understands how to navigate the virtual workplace and is dedicated to providing the platinum-standard experience to their employees and clients and overcoming accounting outsourcing challenges will be a matter of course. You will do it together.

Personiv has over 35 years of experience when it comes to helping organizations like yours unlock efficiency and contain costs associated with transactional and high-level accounting. We have a proven track record in the industry and while our work speaks for itself, we always prefer to listen. Get in touch today to learn more about what virtual accounting can mean for your organization's bottom line – and the impact you're working hard to make every day.

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