Offshore Accounting Contract: What CPA Firms Should Expect

Summary
Before you sign on the dotted line, understanding the key terms in your accounting offshoring contract is critical. This blog outlines the essential conditions CPA firms must consider in offshore accounting agreements. Explore how to protect your accounting firm while leveraging the benefits of offshore accounting services.

Offshore accounting services might seem like a smart way to cut costs and boost efficiency but what happens when the fine print works against you? 

For CPA and accounting firms, navigating any accounting services contract terms can feel like treading through a minefield. From vague service descriptions to unclear exit clauses, the devil is always in the details. In today’s competitive world, understanding what your contract should (and shouldn’t) include isn’t just helpful, it’s essential. 

Let’s delve deeper into the core terms and conditions your accounting firm must nail down when entering into an accounting agreement.

Key Components of an Offshore Accounting Agreement

A well-drafted offshore accounting agreement should serve as a detailed blueprint for the relationship between your firm and the offshore service provider. It should primarily include: 

1. Scope of work (SoW)

Clearly define the services your offshore provider will deliver. A well-structured SoW may include: 

• Core functions: offshore bookkeeping services, payroll, tax preparation, AP/AR, financial planning & analysis 
• Industry-specific requirements: Compliance filings or custom reporting for sectors like healthcare, legal, or real estate 
• Client communication: Specify whether the provider will handle direct communication with your clients, including email, portal updates, or inquiry responses 
• Software tools: Mention if the provider is expected to use specific platforms or integrate with your firm’s existing tech stack 

Pro tip: Always include the scope of work as a formal annexure or schedule to the agreement for full clarity and legal protection. 

2. Service level agreements (SLAs)

SLAs define the performance standards your offshore provider is expected to meet. These benchmarks ensure accountability and help maintain service quality. 

• Response and resolution timelines: Set clear expectations for email replies, issue resolutions, and escalation procedures 
• Accuracy thresholds: Define performance metrics such as 99% accuracy in bookkeeping or 100% compliance in tax filings 
• Turnaround times: Specify deadlines for key deliverables like month-end closing, payroll runs, or tax return submissions 

Pro tip: Include penalties or review clauses in case SLAs are consistently missed to protect your firm’s interests. 

3. Key performance indicators (KPIs)

KPIs translate your SLAs into measurable, trackable outcomes. They provide a framework to evaluate your provider’s ongoing performance. This should include: 

• Turnaround time per transaction: Track average processing time for tasks like invoice entry or payroll runs 
• Number of client escalations: Monitor how often issues are raised by clients due to service delays or errors 
• Error rates or audit flags: Measure accuracy by reviewing error frequency or instances flagged during audits 

Pro tip: Review KPIs quarterly to ensure service levels remain aligned with your accounting firm’s evolving expectations. 

Pricing structures and payment terms for CPA firms to Understand

Understanding your pricing model and payment terms is crucial to ensuring a positive ROI from offshore accounting services. Here’s what to keep in mind: 

1. Common pricing models

Choose a model that aligns with your firm’s workload, seasonality, and budget expectations: 

• Fixed fee model: Predictable monthly cost for a predefined service bundle 
• Hourly billing: Best for ad-hoc tasks or seasonal surges like tax season 
• Per unit/transaction: Common in high-volume services like virtual bookkeeping or invoice processing 
• Value-based pricing: Charges tied to outcomes, such as cost savings, compliance improvements, or financial insights 

Also read: Flexible engagement models for CPA and Accounting firms in offshore explore which approach aligns best with your firm’s operational goals and service expectations. 

2. What payment terms should include

To avoid confusion and delays, ensure the agreement outlines: 

• Detailed invoice structure: Break down services, hours, or units billed 
• Billing cycle: Monthly, bi-weekly, or project-based 
• Currency terms: Especially important when dealing with offshore service providers 
• Late payment penalties: Interest or fees for overdue invoices 
• Refund policy: Clear terms for disputes or service dissatisfaction

3. Watch out for hidden costs

Not all costs are listed upfront, stay alert for: 

• System integration or setup charges 
• Rush job or off-hours service fees 
• Licensing costs for tools like QuickBooks, Xero, or Bill.com if not included in your package 

Pro tip: Ask for a total cost of ownership (TCO) estimate during the proposal stage to avoid surprises later.

How CPA Firms Can Ensure Data Security in Offshore Accounting

As a CPA firm, protecting client financial data is a core ethical and professional obligation. When offshoring, it’s essential that your service provider meets or exceeds the same standards of confidentiality, security, and regulatory compliance that your firm upholds. 

They should have: 

1. Essential confidentiality inclusions

Ensure your agreement covers: 

• Non-Disclosure Agreements (NDAs) with both the firm and its employees 
• Details on what constitutes confidential information 
• Duration of confidentiality obligations (even post-contract termination) 

2. Data security provisions to look for

Reputable offshore service providers should offer: 

• Encryption standards during transmission and storage 
• Multi-factor authentication and user access protocols 
• Secure cloud hosting and backup procedures 
• Disaster recovery protocols to ensure business continuity during cyber incidents or outages 

3. Certifications & compliance standards

Choose remote service providers who align with: 

• SOC 2 Type II for controls on security, availability, and confidentiality 
• ISO 27001 for Information Security Management 

Remember: Inadequate data protection doesn’t just cause reputational damage, it can trigger regulatory penalties, adversely affecting your firm.

Contract duration, renewal, and termination clauses

An ideal accounting offshoring contract should be long enough to build momentum but flexible enough to exit if things go wrong. 

1. Duration and renewal terms

Set clear expectations around how long the contract will last and how it will renew: 

• Initial contract term: Typically ranges from 1 to 3 years 
• Auto-renewal clause: Includes conditions and required notice period for opting out 
• Early termination rights: Outline if and when either party can exit before term-end 

2. Termination clauses to insist on

Protect your firm with termination terms that account for both flexibility and accountability: 

• Without cause termination: Right to exit the contract with prior written notice (e.g., 60 days) 
• With cause termination: In cases of breach, repeated SLA failures, or data security violations 
• Exit support clause: Ensures a smooth handover, includes documentation, system access, and process transitions

3. Post-termination considerations

Ensure the contract includes provisions for wrapping up the relationship securely and cleanly: 

• Data return or deletion: Mandate secure transfer or permanent deletion of all client and firm data 
• Final invoicing and settlement: Outline timelines for last payments, credits, or refunds 
• Ongoing confidentiality: Reinforce that NDAs and data security clauses survive contract termination

Ownership, Access, and Intellectual Property Rights

When offshoring accounting functions, it’s vital to establish clear boundaries around ownership, access, and control of all data, platforms, and work products. This protects your firm’s intellectual property and ensures business continuity. 

1. Work product ownership

Ensure your firm retains ownership of: 

• Financial reports 
• Tax filings 
• Custom process documents 
• Audit trails and workpapers 

2. Platform access and control

Clarify how systems will be accessed, who owns the data within them, and what happens if the engagement ends: 

• Specify whether the provider will work within your firm’s accounting software or on their own licensed platforms 
• Ensure your firm retains full administrative access and the ability to modify or revoke user permissions 
• Confirm that you can request a complete data backup in standard formats at any time, not just at termination 
• Verify that all documents stored in shared drives or cloud platforms remain accessible to your firm, even post-contract 

3. Intellectual property clauses

Don’t overlook the legal language. Ensure that: 

• The agreement states that offshoring does not transfer ownership of any existing IP (including firm-developed processes, templates, or software customizations) 
• Any new assets created during the engagement (e.g., proprietary reports or tools) should be assigned to your firm by default 
• Ensure neither party uses copyrighted materials without authorization, particularly when working with industry-specific templates or branded tools

Legal protections: Risk, liability, and dispute resolution

Effective offshore accounting agreements must protect both party’s interests. They should include: 

1. Indemnification clauses

These clauses protect your firm from losses arising due to the provider’s actions or negligence: 

• Require the provider to indemnify your firm against losses, damages, or penalties caused by: 
• Negligence or willful misconduct 
• Data breaches or non-compliance with laws 
• Misstatements in financial reports or tax filings 

2. Limitation of liability

This helps manage financial exposure in case of errors or disputes: 

• Cap the provider’s liability to a specific amount (e.g., total fees paid in the last 6 months) 
• Exclude liability for indirect or consequential damages unless caused by gross negligence or fraud 
• Consider higher caps for critical services like tax preparation or audit support

3. Governing law & jurisdiction

It establishes the legal framework under which disputes will be settled: 

• Choose a governing law that aligns with your firm’s location or is neutral in offshore contracts 
• Include jurisdiction or venue clauses to determine where legal matters will be heard 
• For international agreements, consider neutral jurisdictions (e.g., Singapore, London) or treaty-backed systems

4. Dispute resolution

Define a structured and efficient pathway to resolve conflicts: 

Implement a tiered process: 

• Step 1: Internal escalation and negotiation 
• Step 2: Mediation with a neutral third-party 
• Step 3: Binding arbitration 
• Set clear timelines for each step to avoid prolonged disputes 
• Clarify cost-sharing responsibilities for mediation/arbitration and designate the venue/platform (e.g., AAA, ICC, JAMS)

Additional clauses that add long-term value

Beyond the standard sections, consider including these to enhance control and clarity: 

1. Right to audit

Retain the right to review service processes and documentation periodically. 

2. Force majeure clause

Outline obligations in the event of uncontrollable events (pandemics, natural disasters). 

3. Change request process

A formal mechanism to expand, modify, or reduce services without rewriting the entire contract. 

4. Training and support

If your in-house team needs onboarding or transition training, make it part of the deal.

Red flags to watch out for in Offshore accounting agreements

Even if the service sounds great on paper, these red flags in your offshore accounting agreements could signal trouble down the line. If you spot any of these, hit pause and renegotiate, or walk away. 

1. Vague scope of work

• Ambiguous language like “accounting support” without a detailed breakdown 
• No mention of tools, reporting standards, or deliverables 
• Absence of responsibility demarcation between your firm and theirs 

Why it matters: Lack of clarity creates scope issues, billing disputes, and missed expectations.

2. No SLAs or KPIs

• Missing benchmarks for turnaround times, accuracy, or responsiveness 
• “Best-effort” commitments with no accountability 

Why it matters: You can’t manage what you can’t measure. Lack of SLAs gives the vendor too much leeway.

3. One-sided termination clauses

• Only the vendor can terminate without cause 
• Excessively long notice periods (90+ days) 
• Exit clauses that require paying for the remaining contract term 

Why it matters: If the partnership fails, you’ll be stuck, or paying for services you no longer want.

4. Weak or missing data security clauses

• No mention of encryption, backups, or access control 
• Generic confidentiality promises without NDAs 
• No penalties or action plan in case of data breach 

Why it matters: Your firm handles high-stakes client data. Weak clauses expose you to legal and reputational risk.

5. Unclear ownership of work product

• No mention of who owns the reports, spreadsheets, or filings 
• Provider claims rights over process documentation or financial models 

Why it matters: You must retain control over everything your clients rely on. 

6. No dispute resolution mechanism

• No clarity on what happens if there’s a disagreement 
• Omission of governing law or jurisdiction, especially for offshore contracts 

Why it matters: If conflict arises, you’ll have no structured way to resolve it, leading to drawn-out and expensive legal battles. 

7. Overpromising or lack of references

• “Too good to be true” claims with no case studies, testimonials, or compliance proofs 
• No transparency on team qualifications or experience 

Why it matters: You don’t want to entrust client finances to an unvetted or unregulated vendor. 

Pro Tip: Always request a redlined contract version from your legal advisor before signing. One overlooked clause can cost you more than the entire offshoring project is worth. 

Conclusion

Offshoring your accounting work is no longer just a cost-saving tactic, it’s a growth strategy. But without a well-structured accounting offshore contract, you can’t go long. 

Whether you’re considering offshore bookkeeping services, tax preparation, or full-scale CFO support, the terms and clauses in your agreement determine how protected, agile, and scalable your partnership will be. 

Need expert help drafting or reviewing your offshore accounting agreement? 

At Infinity Globus, we believe in building trust through transparency. Every client engagement is governed by robust, CPA-friendly contracts that prioritize service quality, data security and confidentiality, and long-term success. 

Contact us today to build a smarter, safer offshoring strategy!

FAQs

What should be included in the scope of work (SoW) for offshore accounting services?

The SoW should clearly define all deliverables, such as bookkeeping, tax preparation, payroll, financial planning and analysis, and reporting. It should also mention frequency, tools to be used, deadlines, and whether client communication is included. 

How can I protect client data in an offshoring arrangement?

Ensure your accounting services contract includes confidentiality clauses, NDAs, data encryption standards, access control, and compliance with frameworks like SOC 2, ISO 27001, or GDPR. 

What kind of pricing models are commonly used in offshore bookkeeping services?

You may encounter: 

• Fixed monthly fees 
• Hourly billing 
• Per transaction pricing 
• Value-based models
  Each model has pros and cons depending on the volume and complexity of your firm’s operations. 

What are red flags to watch for in an accounting offshoring contract?

Beware of: 

• Vague service descriptions 
• One-sided termination clauses 
• Missing data protection language 
• No dispute resolution process 
• Lack of ownership clarification for work products

What should I do if the offshore provider fails to meet expectations?

Your contract should include escalation procedures, SLA breach clauses, and termination rights for underperformance. Always define exit support and data retrieval procedures ahead of time. 

Can I customize an offshore accounting agreement based on my firm’s specific needs?

Yes. Reputable providers will tailor contract terms, SLAs, security clauses, and reporting formats to suit your client base, compliance requirements, and internal workflows. 

Can Infinity Globus work with our existing accounting software and systems?

Yes, we are proficient in a wide range of accounting platforms, including QuickBooks, Xero, Sage, NetSuite, UltraTax, CCH, and Drake. We integrate with your existing tech stack and can also suggest automation solutions to improve efficiency.

Why should CPA firms choose Infinity Globus over other offshore companies?

Infinity Globus stands out with: 

• Specialization in CPA firm support 
• Robust data security and confidentiality measures 
• Transparent contract terms with no hidden costs 
• A highly trained team of professionals with U.S. tax and GAAP expertise 
• A proven track record of helping firms scale profitably and compliantly