Outsourcing Bookkeeping to the Philippines

Whether you are a founder of a startup or are managing a scaleup, bookkeeping is an essential business service to ensure the longevity, compliance, and financial health of a company.

Whether you are a founder of a startup or are managing a scaleup, bookkeeping is an essential business service to ensure the longevity, compliance, and financial health of a company.

Startups and scaleups in Australia may not be immediately profitable or have income streams ready right when they launch.

They may have angel or venture capital investment coming in to finance their Minimum Viable Product or Research and Development, which means every cent coming into the business needs to produce maximum value for the company. 

Running an agile or lean business doesn’t mean skimping on essential business administration. A startup or scaleup can adopt accounting and bookkeeping best practices at a fraction of the cost of hiring a full-time local employee by outsourcing bookkeeping tasks and processes to the Philippines.

As we’ve mentioned on other blog posts, a business can unlock greater efficiencies, better forecasting, and financial management, and maintain tax and reporting compliance all at lower relative costs than hiring a local bookkeeper. 

Why consider outsourcing bookkeeping to the Philippines?

The immediate reason to outsource bookkeeping to the Philippines is cost reduction. The Philippines has a good standard of development yet drastically lower cost of living compared with Australia, the United Kingdom, or the United States. Australian businesses can hire Filipino professional bookkeepers at a fraction of the cost of hiring locally – up to 50-70% in most cases.

The Philippines is a Southeast Asian country with many similarities to Western countries such as Spain and the United States, due to their shared history. As such, much of the population speaks fluent English – approximately 58% of out of almost 110 million. As of 2019, 207,178 Filipinos graduated with a bachelors’ or equivalent degree in Business Administration or related fields, according to the Commission for Higher Education.

The Philippines Government also recognises the significant contribution Business Process Outsourcing (BPO) makes to Filipino Gross Domestic Product (GDP). The government has introduced special incentives such as Special Economic Zones with reduced tax and tariff burdens for companies offering BPO services such as outsourcing bookkeeping. Other initiatives include establishment of a strict data privacy act, a tertiary education subsidy, and their Digital Cities 2025 program, a project aimed at developing BPO hubs beyond metropolitan Manila, the nation’s capital.

This allows Australian businesses access to a highly talented, well skilled, and in some cases, experienced pool of bookkeeping or actuarial talent. These are set at competitive rates for Australia, yet afford Filipinos in-country a generous salary and comfortable standard of living.

Figures from Seek.com.au show that an average salary for a bookkeeper range between $70,000 to $80,000, not including utilities overheads, training and professional development, payroll tax, superannuation, and other associated costs.

By outsourcing bookkeeping services to the Philippines, you gain the advantage of enhanced flexibility and scalability while maintaining cost-efficiency

Ensuring data security and compliance

By hiring external, outsourced bookkeepers means trusting people in another country with your company’s sensitive financial information. Though the Philippine government enforces a world-class Data Privacy Act, concerns about protecting first- and third-party data can still arise.

According to the Australian Cybersecurity Centre, one of the top three cybercrimes businesses fell victim to in 2022-23 was online banking fraud. Cybercrimes costs businesses an average of $71,600 per incident.

Implementing cybersecurity training as part of an onboarding or induction process as well as strict cybersecurity protocols for local and outsourced employees can mitigate the risk of cybersecurity and data intrusion or theft. You will need to conduct thorough due diligence with outsourcing partners to assess their own security practices and procedures, as well as past performance. 

Regular audits and monitoring are crucial. An Accenture survey revealed that 69% of organisations experienced an attempted or successful theft or corruption of data by insiders during 2016, and a 2023 survey showed that 97% of organisations showed an increase of cyber threats since the commencement of the Russia-Ukraine war.

Using secure cloud-based software with strict data monitoring and access control can also reduce the risk of compromised data from outsourcing bookkeeping.

How Filipino bookkeepers can assist your business

Thanks to cloud accounting software such as Xero (which we recommend), outsourcing bookkeeping to the Philippines is straightforward. Outsource bookkeepers can pick up most, if not all bookkeeping duties that a local bookkeeper can perform but at a fraction of the cost.

The Philippines is also one of the 120 countries worldwide that adhere to the International Financial Reporting Standards (IFRS) published by the International Accounting Standards Board. These are consistent with Generally Accepted Accounting Principles (GAAP), the same accounting and bookkeeping procedures Australian businesses use.

A bookkeeper can implement or streamline processes around accounts receivable and payable. They can track and pay vendor invoices as well bill clients or customers and follow up if they are overdue. They can also be notified about payment terms for various liabilities, so the business isn’t penalised for late or delinquent payments.

Bookkeepers can also reconcile bank statements with the company accounts, ensuring income and expense records match up with the transaction statements generated by your bank. This is crucial for any business, as missing transactions or inconsistencies can lead to incorrect tax information (for BAS or GST) and potential ATO audits.

A bookkeeper is also responsible for maintaining or updating a business’ chart of accounts. This is an index of the several account types you have (assets, liabilities, expenses, revenue, and equity. It usually contains financial statements, account numbers, and descriptions. This allows your business more convenient viewing and reporting of financial data. Additionally, you can learn more about your spending and income patterns, known as cash flow, which is a vital part of business intelligence.

Your bookkeeper will also be the first point of contact and administration for regular payroll. They will oversee disbursement of rolling payroll each week/fortnight/month etc., as well as calculating payroll tax, Pay As You Go (PAYG) income tax, superannuation contributions, bonuses, and other taxes or deductions such as novated leases or Fringe Benefits Tax (FBT).

Outsourced bookkeepers will also be reconciling company credit cards and employee expenses, such as reimbursement for accommodation, meals, etc. while representing the company on the road. These may be classified as Fringe Benefits Tax, which the bookkeeper will need to figure out as part of their work.

Bookkeepers will need to account for asset value changes such as depreciation and amortisation. They will need to figure out the loss of value and potential tax write-offs for depreciating assets, and amortisation costs for intangible (IP) assets such as patents, copyright, trademarks, and so on.

A bookkeeper is essential for implementing the rolling processes for Business Activity Statements, Goods and Services Tax, company tax, payroll tax, and other taxes such as land duty (if a business owns a building.) The paperwork needs to be checked for accuracy with all discrepancies reconciled or eliminated, ready for lodgement to the Australian Taxation Office. This can also come in useful for businesses that may be eligible for the R&D Tax Incentive.

Other tasks outsourced bookkeepers may undertake, either by themselves or with assistance from administration staff, is conducting inventory management; financial statement analysis; reviewing a budget vs. actuals; creating regular off-cloud backups of financial information; and maintaining the general ledger.

Case study – bookkeeping for a local tech startup

A local tech startup working in implementing generative AI with data science was working on research and development, thanks to some seed funding from an angel investor. They were delaying their lodgement of the R&D Tax Incentive, which can provide dollar-matching by the government for expenditure on R&D. You can read more about the R&D Tax Incentive at Fullstack Advisory.

Their cash flow was consistently low, having to use lines of credit and other facilities to pay imminent liabilities. The founder and core team decided to hire an outsourced bookkeeper to set up financial processes and procedures to reconcile accounts, ensured their bills were paid and they were receiving income on time from debtors. This turned around their cash flow situation, and the company was cash flow positive within a couple of months, which improved their value proposition and allowed other venture capital firms to seek further investment.

Working with other outsourced professionals

Bookkeepers, whether entry-level or senior, work in tandem with other outsourced professionals as part of a larger BPO team. They may liaise or coordinate financial processes with administration staff, with the former recording invoices and the bookkeeper processing them with GAAP principles. They may also work with customer service personnel to process refunds or credit notes in the case of faulty or missing goods, as would happen in an eCommerce business.

The Fullstaffer Difference

Fullstaffer offers dedicated offshore staff for all manner of businesses and companies looking for outsourcing bookkeepers. We provide talent to enhance your business and improve productivity and streamline financial processes. Our mission is to help founders go global by making building teams easier. We source, screen, and train Filipino and global professionals to help your online business increase capacity, modernise systems, and reduce HR overheads. We work with you to clarify your job needs, assess candidates from our vast talent pool, and organise Kickoff, instantly adding value to your business. We draw from the Top 5% of staff in the Philippines with years of proven experience in tech and online business.

Schedule a 30-minute call with our experts to discuss your staff requirements and hiring needs.



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