Accounting Outsourcing in the Philippines
The article discusses Accounting Outsourcing in the Philippines.
What is Accounting Outsourcing?
Business owners seek to hire outsourced teams to manage all financial transactions, from fixed payments and variable expenses to bank deposits and budgets, while reducing costs and improving operations.
Accounting Outsourcing is designed to provide the business with accounting service support. Accounting Outsourcing lets you transfer Accounting functions to a third-party provider that hires a team of outsourced accountants to provide accurate quantitative information on the financial position, liquidity, and cash flows of our business, and ensures compliance with tax regulations.
Amid the COVID-19 crisis, the global market for Finance and Accounting Outsourcing estimated at US$43.1 Billion in the year 2022, is projected to reach a revised size of US$53.4 Billion by 2026, growing at a CAGR of 5.9% over the analysis period. Multi-Process F&A BPO, one of the segments analyzed in the report, is projected to grow at a 6.8% CAGR to reach US$19.3 Billion by the end of the analysis period.
The global Accounting business process outsourcing (BPO) market is composed of external or third-party business process outsourcing providers located either onshore, nearshore or offshore.
Finance and Accounting Onshore Outsourcing is a type of strategy where businesses decide to outsource accounting services to a provider located in the same country. Nearshore Accounting Outsourcing is when a business decides to outsource to a provider located in a neighboring country. Lastly, Accounting Offshoring is a type of outsourcing which is the process of businesses hiring, building, managing a dedicated team or staff through an outsourcing partner located outside a company’s geographical location to support business processes.
Business Process Outsourcing in Finance and Accounting industries enables delegation of data entry services such as the providing calculations to businesses, preparing of budget forecasts, processing invoices, maintaining accounting records, auditing financial documents and procedures, reconciling bank statements, and calculating tax payments and returns, publishing financial statements on time, organizing, managing and processing billing and invoice reports, maintaining accounting records, and making sure procedures are fully compliant.
Outsourced Accountants have the technical expertise in accounting principles, can work comfortably with numbers, can adapt to a fast-paced work environment, have excellent accuracy, attention to detail, planning and organizational and communication skills.
Is Accounting among the Top Outsourced Functions?
Accounting is a highly technical function which makes this function related tasks the top outsourced function, next to IT tasks.
Accounting and IT are among the most commonly outsourced jobs in small businesses. 71% of financial service executives outsource or offshore some of their services… Small business outsourcing stats show that 37% of all accounting and IT tasks get outsourced.
Accounting Outsourcing in the Philippines
The Philippines is a top Accounting outsourcing destination for investors who want to expand operations offshore.
The Philippines is regarded as a highly literate and proficient English-speaking country. Offshore businesses with English as the primary language can easily assign tasks to outsourced accountants in the Philippines who have high literacy and comprehension of the language.
Filipinos are also used to the business process outsourcing setup and the time zone differences when working with a client offshore. Filipinos can easily adjust to your company’s operations and adjust to time zone differences. Outsourced Accountants can be assigned schedules, alternate working schedules or even provide 24/7 support depending on the client.
How Qualified are Accountants in the Philippines?
In the Philippines, the Department of Labor Employment (DOLE) recently released its JobsFit 2022 Labor Market Information Report that looks at Key Employment Generators or KEGs which are industries/sectors with the greatest potential to generate employment and absorb bulk of the workforce in the years to come.
Accountants are among the list of Cross-cutting In-Demand and Hard-to-Fill Occupations in the Information Technology – Business Process Management (IT-BPM) Key Employment Generator (KEG).
The Philippines is a great way to start when outsourcing Accounting services. Let’s take a look at required qualifications to be Certified Public Accountants in the Philippines.
Professional recognition or accreditations are Achieved by becoming a member of the Philippines Institute of Certified Public Accountants (PICPA).
For domestic public companies, the Philippines has adopted IFRS Standards as Philippine Financial Reporting Standards (PFRSs), except on the aspect of revenue recognition under IFRS 15 for real estate companies that avail of the relief granted by the SEC. For listings by foreign companies and SMEs, IFRS Standards adopted as Philippines Financial Reporting Standards (PFRS) are required.
To qualify as a Certified Public Accountant (CPA), Accounting graduates are required to complete a Bachelor of Science degree in Accountancy (BSA) degree, higher or equivalent or a Bachelor’s Degree In Accounting, higher or equivalent. This course takes approximately 5 years full time to complete. Aside from these, to qualify, graduates must pass the Certified Public Accountant Licensure Exam (CPALE).
The Certified Public Accountant Licensure Exam (CPALE) is one of the most difficult board exams. The CPALE is a culmination of knowledge and mastery of Accounting concepts such as Auditing, Management Advisory Services, Financial Accounting and Reporting, Advanced Financial Accounting and Reporting, Taxation, and even Regulatory Framework for Business Transactions.
According to the Professional Regulation Commission (PRC), only 990 individuals out of the 4,442 examinees passed the May 2022 Certified Public Accountant (CPA) licensure examination. The tests were held by the Board of Accountancy in several provinces in the Philippines last May 2022. This rate is slightly higher than that of last December 2021. Only 318 out 1,454 examinees passed the exams for that year, with a passing rate of 21.87%.
Once qualifiers have passed the CPALE, continuous training, whether achieved from formal, informal or non-formal learning including professional work experience, is mandatory.
Republic Act No. 10912, otherwise known as the “Continuing Professional Development (CPD) Act of 2016”, was created as the mandatory compliance in the advancement of knowledge of all registered and licensed professionals under the regulation of the Professional Regulation Commission (PRC), such as Certified Public Accountants (CPAs). PRC Professionals are required to take CPD Credit Units, or the value of an amount of learning can be accumulated to predetermined levels, to receive the renewal of their Professional Identification Card.
Aside from these outsourced accountants are well-versed in accounting software. The “Continuing Professional Development (CPD) Act of 2016” encourages CPAs to also have up-to-date knowledge and training of functionalities of software and systems. Sample software that are commonly used in the Accounting industry which outsourced accountants are knowledgeable in are:
Intuit QuickBooks Online
Sage Business Cloud Accounting
When outsourcing accounting to the Philippines, look for a provider who can conduct cloud connectivity training sessions and support existing cloud-based helpdesk software, cloud-based collaboration and connectivity tools. Connext Global Solutions can support your active customer service software or preferred customer service software.
Connext Global Solutions is a global business process offshore outsourcing provider based in the Philippines that builds, hires, trains, and manages outsourced Accounting teams for your business.
Businesses looking to outsource Accounting functions can hire the following:
Data Entry Specialists
Clients can build a customized, 100% dedicated offshore Accounting team.
Learn more about Connext Global Solutions.
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Department of Labor and Employment (DOLE). https://www.dole.gov.ph/. Accessed 13 September 2022.
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Catalina Ricci S. Madarang. “Congratulatory messages pour in for new CPAs, 2 June 2022. Interaksyon. https://interaksyon.philstar.com/trends-spotlights/2022/06/02/218675/congratulatory-messages-pour-in-for-new-cpas/#:~:text=According%20to%20the%20Professional%20Regulation,that%20of%20last%20December%202021. Accessed 13 September 2022.
Republic Act No. 10912. Republic of the Philippines Professional Regulation Commission. https://www.prc.gov.ph/sites/default/files/CPD-FAQs-2020.pdf. Accessed 13 September 2022.
Donna Fuscaldo. “Best Accounting Software for Small Business in 2022, Updated Sep 08, 2022 Accessed Sep 13, 2022. Business News Daily. https://www.businessnewsdaily.com/7543-best-accounting-software.html. Accessed 13 September 2022.
“Philippines” | Who uses IFRS Accounting Standards?. IFRS. https://www.ifrs.org/use-around-the-world/use-of-ifrs-standards-by-jurisdiction/view-jurisdiction/philippines/. Accessed 13 September 2022.
Deepen your knowledge of why the Philippines is a prime outsourcing destination. Visit our blog to learn about the practical advantages of outsourcing accounting services to the Philippines, perfectly aligning with your interest in the region’s accounting outsourcing capabilities.