Often times small businesses will consider only the cost paid to the offshore vendor in their ROI analysis when considering offshore vendors for their financial and accounting work. But there several other one time and monthly costs they need to consider in their total cost calculations. What are all the different costs small businesses must consider in their Total Cost Analysis so that they can estimate the overall ROI of their offshore engagement?
Different Costs of Offshoring Financial & Accounting Work
Small businesses mainly consider offshoring their work, they will consider only the hourly rate they need to pay to the offshore vendor for various accounting works like bookkeeping, accounts payable, accounts receivable, etc. There are several other additional hidden costs small business have to face in their offshore outsourcing engagement. Typically a small business goes through following offshore accounting work cycle in their offshore engagement:
a?¡é Verifying the finished work from the offshore vendor
a?¡é Answering questions for the offshore vendor
a?¡é Selecting an offshore accounting vendor
a?¡é Sending the work to the offshore vendor
a?¡é Receiving the finished work from the offshore vendor
a?¡é Monitoring the quality of the finished work from the offshore vendor
2. Cost of Selecting offshore accounting vendor is very small
The cost associated with selecting an offshore accounting vendor will be small compared to other costs. Most of the time small businesses can find a qualified offshore accounting vendor simply by searching in Google or by contacting other small businesses those who are already using an offshore vendor, for detailed discussion on this topic read Offshore Accounting Success. This cost is the one time cost and it will be similar to selecting an onshore vendor. 3. Cost of sending the work to an offshore vendor Small businesses must consider various types of cost like Scanner, High speed Internet, Backup Server, etc, to send their financial and account documents to an offshore vendor, but the good news is that it will be a one time investment and most of the small businesses will have these in place already. There are three different offshore accounting models you can use to send your accounting and financial work to the offshore vendors and for these you will incur following one time cost.
3.1. Scanner & Scanning software
Most of the accounting and financial data will be in your accounting software like QuickBooks, Peachtree etc, but there will be other documents like Bills, Checks, Invoices, Goods received notes, etc will be on paper and these should be digitized using a scanner and a scanning software to convert it into PDF documents which will be stored in your computer. Once the documents are in your computer then you can give access to the offshore vendor to view the PDF documents or they can retrieve it from your computer to perform their work in the offshore location.
Most of small businesses already have a scanner, if not a scanner (scanning software comes with the scanner) can be purchased for less than $1000.00. The cost of the scanner will go up based on the volume of accounting and financial documents to be scanned in a given day. It will be a one time cost for the small business and also by scanning all their paper based accounting documents; you can improve the efficiency of overall accounting process.
3.2. High speed Internet Connection Cost
You need to have high-speed Internet connection to send and receive the work to and from offshore location. Again all most all small businesses already have DSL/T1 Internet connection if not they can get a DSL Internet connection for $60-100/month.
3.3. Secure FTP software
Small businesses need secure FTP software to securely send accounting documents to offshore vendor and can receive it back from them securely. For this purpose small businesses can use several open source FTP software. The open source FTP software is free and small business need not spend any money to use it. The FTP software will be installed in the computer that is connected to the High speed Internet.
If small businesses are using Application Service Provider (ASP) like Quickbooks online, cpaasp.com, etc, then it is possible for offshore vendors to directly access your accounting data directly from the ASP vendor. In this case there is no need to use secure FTP software.
3.4. Backup Server Once small businesses start digitizing their accounting documents for their offshore vendors, they need to start planning for the backup server to backup all their accounting documents. Most of the small businesses will have this feature already, if not it is a good investment to have a backup server to backup all their accounting and financial data from their main computer to the backup server. For any business a??Business continuitya?? is a vital task and the backup server will help the small businesses to recover all the accounting data in case of main computer failure. |
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