Before businesses had the ability to easily and continuously conduct themselves outside their immediate geographic area, manual bookkeeping wasn’t a demanding task. Any business owner could easily keep track of their accounts of assets, liabilities, equity, revenue, and expenses. Yes, some businesses had added complexity if they traded outside their city, region, or country, but those transactions were slow; oftentimes, their periodicity was unpredictable due to weather, theft, or disaster.
Over time, improvements in travel opened business opportunities outside a merchant’s immediate geographic area. Businesses began to find regular customers in distant places, growing their client bases substantially. And with every subsequent innovation in travel, communication, commerce, or banking, the bookkeeping became just a little more difficult to handle.
Today, a business that isn’t keeping up with its bookkeeping at all times could start a cascade of additional work just to catch up. And while the system itself is still the best we know of for record-keeping, its efficiency as a manual task is at an all-time low. The major elements of bookkeeping are data entry, bank reconciliation, and reporting. Depending on the client, that can be a mountain of daily grunt work that bores most humans to tears. On top of that, there’s only so fast they can do it, even if they DO find it interesting.
Enter automation. The tasks a human bookkeeper does can all be done today by automated systems that offer far better accuracy, speed, and reliability — at a fraction of the cost.
Outsourcing
The concept of hiring an outside contractor to do some of your essential work is far from new. But in the United States, it really began to take off in the late 1990s and early 2000s. Outsourcing includes offshoring, which refers to outsourcing outside the country. This kind of outsourcing is popular among U.S. businesses because many foreign countries have far lower wages for professional workers.
Countries such as India, China, the Philippines, and Colombia have become popular places to find large, inexpensive labor pools, many of which even offer fluent and capable English speakers.
Offshoring presents some unique challenges you should be prepared to consider. First, differences in time zones can be extreme, especially if your firm is located on the West Coast. If you hire workers directly this is a smaller concern, because part of the agreement can be that they must align to your time zone. If you’re working with a service provider or agency, however, this negotiation could be more complicated.
A potential issue here mirrors one U.S. workers experience: lack of work/life balance and on-the-job-happiness. The popularity of offshoring means workers overseas don’t have too much trouble finding work — and if they can get a job that allows them to keep normal hours, they’re likely to take that over one that forces them to be opposite their friends’ and families’ schedules.
Another possible issue is client/public perception. Fairly or unfairly, offshoring comes with some baggage, much of it relating to “shipping jobs out of the U.S.” In recent years offshoring has become ubiquitous, and this objection has quieted down considerably. But it’s still out there, and worth thinking over.
Clients might also question whether their work can or should be sent outside the U.S. over concerns for security, depending on their tolerances and specific market. You could also face a few uncomfortable questions over why, if you send their bookkeeping out of the country, they can’t just skip the middleman and do the same themselves.
Finally, offshoring could lead to a culture or language clash for your firm, especially if you hire directly. Even when the workers are excellent and their language skills sufficient, most countries don’t align to U.S. norms and calendar holidays. You’ll find staff abroad take much more frequent time off and have different expectations regarding their work and how they discuss it with others.
That said, offshoring also offers many benefits, including: reduced cost for labor; ease of scaling the workforce; readily available and qualified talent; and reduced infrastructure needs such as office space.