In the dynamic and fast-paced world of e-commerce, maintaining the financial health of your startup or small business is paramount. Accurate accounting is not just a necessity; it’s a strategic imperative for sustainable growth and success. However, managing accounting and bookkeeping in-house can be overwhelming, especially for businesses looking to expand globally. This is why you should outsource e-commerce accounting to Philippine experts.
Choosing the right global provider for your accounting needs is equally critical, and in this regard, CloudCfo, a Philippine-based cloud accounting firm, has emerged as a trusted partner for e-commerce businesses worldwide. In this article, we’ll explore the top reasons to consider this approach, supported by data on outsourcing in the Philippines.
Advantages in Outsourcing E-commerce Accounting to the Philippines
The Philippines has emerged as a global hub for outsourcing various business functions, and accounting and financial services are no exception. The country’s skilled workforce, proficiency in English, and commitment to quality have made it a prime destination for businesses worldwide.
- According to the Department of Trade and Industry (DTI) in the Philippines, the country is one of the top outsourcing destinations in the world.
- The outsourcing industry in the Philippines has been growing at an average annual rate of over 20% for the past decade.
- The Business Process Outsourcing (BPO) sector, which includes accounting services, accounts for a significant share of the Philippine economy, contributing billions of dollars in revenue annually.
Now, let’s delve into the top reasons to outsource e-commerce accounting to the Philippines, with a special focus on working with e-commerce experts in the country.
Consistent, Transparent Accounting Standards for Global Compliance
The foundation of sound accounting is rooted in robust and globally recognized standards. In the Philippines, accounting procedures align seamlessly with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), a prestigious independent accounting and finance authority based in London. This alignment with IFRS enables organizations in more than 120 countries to base their financial reporting processes on internationally accepted standards.
In the Philippines, the generally accepted accounting principles (GAAP) manifest as the Philippine Accounting Standards (PAS) and the Philippine Financial Reporting Standards (PFRS), both of which reference IFRS. While accounting standards may vary across countries due to differences in legal, economic, and cultural contexts, Filipino accounting professionals are renowned for their flexibility and adaptability. They swiftly acquaint themselves with industry principles and government regulations, making them valuable assets for e-commerce startups.
Moreover, Filipino certified public accountants (CPAs) excel in managing various accounting standards, measures, and procedures. Their world-class skills have attracted international accounting firms.
Reduced Legal and Management Duties for Minimal Financial Risk
Outsourcing accounting services to the Philippines not only provides cost advantages but also mitigates legal and management responsibilities for businesses. By outsourcing accounting functions to the Philippines, companies sidestep the legal and financial risks associated with directly hiring local talent.
When businesses outsource tech solutions or accounting and bookkeeping processes, the service provider assumes responsibility for recruitment activities, from advertising job openings to onboarding new hires. They also manage aspects like staff income taxes, attendance, and related duties. Client companies are required to review the provider’s periodic reports, eliminating the need for intricate HR operations.
Outsourcing human resource activities to a service provider offers several benefits, including:
- Streamlined operations: Service providers possess HR experts who ensure compliance with government regulations and industry standards.
- Access to a broad talent pool: Accounting services providers have robust recruitment processes, ensuring clients have access to candidates who are well-suited for accounting roles.
- Cost-effective services: If a business requires additional staff, they do not have to bear additional expenses related to taxes, non-monetary benefits, and compensation costs. The service provider leverages its resources, funds, and accounting team to guarantee cost efficiency.
- Liberated time: HR activities can be cumbersome and time-consuming. Assigning these responsibilities to a service provider represents a practical choice for many companies, freeing up time for core business activities.
Various Outsourced Services for Different Accounting Needs
E-commerce businesses have a wide array of outsourcing options when it comes to accounting processes in the Philippines. These services cater to a range of accounting needs, including:
- Management accounting: An accounting service provider prepares financial reports to assist clients in making better-informed decisions. They evaluate and explain accounting data using operational metrics or key performance indicators (KPIs).
- Accounting audit: Service providers manage financial statements, receipts, and documents. They track, analyze, and update data to reduce the risk of fraud or malpractice.
- Financial controller services: An accounting service provider oversees a client’s accounting operations, ensuring accurate and up-to-date cash flow information. Third-party accountants also provide advice based on financial data.
- Bookkeeping: A dedicated team documents all of the client’s financial transactions, tracking and revising records or book entries to support operational investments and financial decisions.
- Financial analysis: An accounting service provider leverages a client’s accounting records to evaluate various aspects such as sales contracts, credits, bills, and product costs. They review past financial performance and estimate future profitability.
An Ideal Alternative to Address the CPA Shortage in the U.S.
The United States is currently grappling with a significant shortage of accounting professionals, presenting challenges for businesses and accounting firms. The high turnover rate and the decline in new Certified Public Accountants (CPAs) have been exacerbated by a decrease in accounting graduates, partially driven by the impact of the COVID-19 pandemic.
In addition, the majority of U.S. colleges and universities produce more specialized accountants than generalists, leaving a gap in general business skills that many companies require. The decrease in accounting graduates, coupled with the imminent retirement of many baby boomer CPAs, has intensified the problem.
Outsourcing accounting services to the Philippines provides a strategic solution to the talent shortage faced by U.S. corporations and accounting firms. BPO companies in the Philippines offer access to a pool of professionals trained in various accounting and financial activities. These third-party accountants and bookkeepers possess diverse qualifications suitable for meeting the needs of any business.
Philippine colleges and universities consistently produce tens of thousands of accounting graduates each year. Even though some graduates may not pass the CPA licensure exam, the country still generates over 2,000 new CPAs annually. Most of these graduates belong to the millennial and Gen Z generations, characterized by their enthusiasm, adaptability, and technical skills.
With this abundant supply of accounting professionals, Philippine service providers can guarantee skilled contractors to work on outsourced processes, ensuring consistency in compensation costs. The large talent pool in the Philippines helps bridge the talent gap faced by businesses in the U.S.
High English Proficiency for Better Interaction and Understanding
Effective communication is crucial in outsourcing relationships, and the Philippines excels in this regard. Filipino accountants are fluent in both written and verbal English, ranking consistently high in Asian countries with proficient English skills, second only to Singapore.
Filipino CPAs typically spend four to five years in college or university to complete their bachelor’s degrees, and English is the primary medium of instruction in accounting courses. The curriculum closely mirrors that of the U.S., Australia, and the UK in terms of standards and subjects. As a result, Filipino graduates are well-versed in Western accounting systems and procedures.
Should you outsource your accounting functions to the Philippines?
Yes, outsourcing e-commerce accounting to the Philippines is a strategic move for businesses seeking excellence in accounting standards, cost-effectiveness, risk mitigation, diversified services, and a reliable talent pool. The Filipino advantage of aligning with international financial standards, cost savings, legal and management simplification, and skilled accounting professionals makes it a preferred destination for e-commerce startups.
With high proficiency in English, Filipino accounting professionals effectively bridge the communication gap and ensure a seamless outsourcing experience. CloudCfo, with its specialized expertise, is at the forefront of providing these advantages to e-commerce businesses, facilitating their growth and success in the dynamic world of online commerce.
Ready to harness the power of outsourced e-commerce accounting, benefiting from the Philippines’ unmatched expertise and cost-effectiveness? Let CloudCfo be your strategic partner in achieving financial excellence. Contact us today to explore how our specialized services can empower your e-commerce business.