When engaging offshore accounting services, a strong Service Level Agreement (SLA) isn’t just a formality — it’s your safeguard for accountability, clarity, and performance. Without a clearly defined SLA, misunderstandings can arise, expectations may go unmet, and your business could face unnecessary financial or compliance risks.
So, what exactly should be included in an SLA for offshore accounting services?
In this article, we’ll walk through the essential components of a comprehensive SLA and explain why each is important in ensuring a productive and secure relationship with your offshore accounting provider.
1. Scope of Services
Start by clearly defining what services the offshore team will provide. Be specific.
Include:
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Bookkeeping tasks (daily, weekly, monthly)
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Accounts payable and receivable
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Bank reconciliations
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Payroll processing
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Tax preparation and filing
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Financial reporting
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Software setup and maintenance
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Compliance support (GAAP, IFRS, etc.)
This section eliminates confusion about who is responsible for what — and ensures all expectations are aligned from the start.
2. Performance Metrics (KPIs)
Your SLA should outline Key Performance Indicators (KPIs) that measure the quality and timeliness of the provider’s work.
Common accounting KPIs include:
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Invoice processing turnaround time (e.g., 24–48 hours)
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Monthly close completion (e.g., within 5 business days)
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Accuracy rate (e.g., >99.5% error-free transactions)
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Timely submission of reports
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Reconciliation frequency and timeliness
Clearly stated KPIs give you measurable benchmarks to track performance and hold the provider accountable.
3. Turnaround Times and Response Times
Define the expected response time for communication and turnaround time for deliverables.
Examples:
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Respond to emails or queries within 12 hours
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Complete weekly reconciliations within 2 days
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Submit monthly reports by the 5th business day of the month
This ensures the offshore team stays aligned with your business operations and internal deadlines.
4. Communication Protocols
Smooth communication is vital, especially when teams work across time zones.
Include:
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Preferred communication channels (e.g., email, Slack, Zoom)
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Designated points of contact on both sides
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Frequency of check-ins (e.g., weekly meetings)
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Time zone alignment and working hours
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Escalation paths for urgent issues
Establishing this upfront prevents delays, misunderstandings, and dropped tasks.
5. Data Security and Confidentiality
Your offshore provider will be handling sensitive financial data, so it’s crucial to set data protection and privacy standards.
This section should cover:
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Compliance with GDPR, SOC 2, HIPAA (as applicable)
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Encryption of data during transmission and storage
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Restricted access to financial platforms and data
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Confidentiality clauses for all staff involved
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Security protocols for remote access (VPNs, MFA, etc.)
You may also want to require background checks for key personnel handling your data.
6. Compliance Requirements
If your business operates in a regulated industry or multiple jurisdictions, your offshore team needs to comply with relevant laws.
Specify compliance with:
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Local tax regulations
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International accounting standards (GAAP, IFRS)
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Industry-specific compliance rules (e.g., HIPAA for healthcare)
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Audit preparation and support standards
This protects your business from fines, penalties, and reputational damage.
7. Software and Tools
Clarify which accounting platforms and tools the offshore team will use — and who is responsible for licenses and access.
Include:
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Approved accounting software (e.g., QuickBooks, Xero, NetSuite)
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Access levels for offshore staff
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Integration tools (e.g., for payroll, invoicing, or analytics)
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Who handles software updates and maintenance
Ensure your offshore team is fully trained in the tools your company relies on.
8. Escalation and Issue Resolution
No service relationship is perfect. Your SLA should define a structured escalation process for resolving issues.
Outline:
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How issues should be reported (e.g., via ticketing system or email)
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Timeframes for response and resolution
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Contact hierarchy for escalating unresolved problems
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Penalties for persistent SLA violations
This minimizes downtime and ensures problems are dealt with swiftly and fairly.
9. Reporting and Reviews
Set a cadence for regular performance reviews and reporting to stay aligned and track progress.
Include:
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Monthly or quarterly service performance reports
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Financial reports (P&L, balance sheet, cash flow, etc.)
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Scheduled review meetings to discuss improvements
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Feedback mechanisms for both parties
These regular touchpoints help maintain transparency and trust.
10. Confidentiality, NDAs, and IP Protection
Ensure your business information, internal processes, and intellectual property (IP) are fully protected.
The SLA should cover:
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Non-Disclosure Agreements (NDAs)
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Intellectual property ownership (e.g., all reports, data, and processes belong to your company)
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Prohibition on subcontracting without written consent
Make sure the legal jurisdiction of your agreements is clearly stated.
11. Termination Clauses
Sometimes, partnerships don’t work out — or they run their course. Your SLA should define termination terms that protect both parties.
Include:
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Notice period required (e.g., 30–60 days)
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Grounds for immediate termination (e.g., data breach, repeated non-performance)
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Obligations upon termination (e.g., return of data, final reporting)
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Exit process and support for handover
This ensures a clean and secure transition, if needed.
12. Pricing and Payment Terms
Be clear about:
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Hourly rates or fixed monthly fees
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Invoicing frequency and due dates
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Payment methods and currencies
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Penalties for late payment
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Additional charges for out-of-scope work
Transparency here reduces friction and billing disputes.
Conclusion
An effective SLA for offshore accounting services goes far beyond a handshake or a generic contract. It’s a detailed roadmap that defines responsibilities, expectations, timelines, and protections for both sides. When done right, it creates a strong foundation for a long-term, productive relationship — where your offshore accounting provider becomes a true extension of your finance team.
Before signing with any offshore provider, invest the time to build a solid SLA. It’s not just a document — it’s your insurance policy for quality, compliance, and control.