Finance and accounting (F&A) or financial process outsourcing is one of the knowledge process outsourcing (KPO) sectors of the business process outsourcing (BPO) industry in the Philippines.
This is one outsourcing field that medium and large global companies have been offshoring for some time. While the Philippines does not lead in this outsourcing sector, it is doing better every year, what with some captive outsourcing companies having been set up in recent years, largely for finance and accounting outsourcing.
Finance and accounting outsourcing is very broad, ranging from the simple, repetitive functions to the more complex processes at any stage of the financial process continuum. A rundown of F&A services being outsourced is as follows: general accounting such as accounts payable, accounts receivable, billing, payroll processing, staff expense claims, bookkeeping; credit and collections; audit services; bank reconciliation; order management; financial reporting; transaction processing; tax compliance; forecasting; budgeting; financial reporting; and the more complex mergers and acquisitions; due diligence analysis; governance; systems and performance upgrades; revenue assurance; working capital analytics; and risk management.
Why outsource finance and accounting processes to the Philippines
Companies looking to outsource finance and accounting processes decide on the Philippines for many reasons. The following are among the more persuasive arguments for outsourcing F&A to the Philippines:
- Lower costs. Operating costs in the Philippines are lower – from rent to the standard of living to staff salaries. A U.S. study noted that the salary of a skilled BPO resource in the Philippines is only 14% that of the counterpart resource in the U.S. The salary of a Philippine operations manager is roughly a fourth of the U.S. counterpart.
- Skilled workforce’s expert and quality services. Despite the lower costs, there is no degradation in terms of output from finance and accounting outsourcing to the Philippines. Accounting and business graduates from the Philippines have the specialized F&A knowledge of the internal departments of companies abroad. Filipinos are English-speaking and familiar with international accounting standards.
- Efficient data management. With the large volumes of data processed in F&A outsourcing, resources abroad do not have the bandwidth to work on the files and then examine them properly. Since the more time-consuming tasks are handled offshore, the company can make better decisions using the organized output.
Finance and accounting outsourcing is one of several KPO sectors that the Philippines is seeking to boost even further on the road to becoming a behemoth in the global outsourcing industry. Promotion of the country’s many advantages in F&A outsourcing will help make this scenario a reality.