Consider the current efficiency and cost-effectiveness of your in-house AP processes. If managing AP internally is proving to be cumbersome, error-prone, or too costly, outsourcing could offer a much-needed solution. Reliance on an external company for crucial financial operations can be risky, especially if the provider faces downtime, service issues, or discontinues operations. As a result, accounts payable outsourcing emerges as a powerful tool for companies looking to enhance their financial operations while focusing on their core competencies. This is where accounts payable outsourcing enters the spotlight, offering a streamlined, expert-managed alternative to the traditional in-house approach.
Early payment discounts
This will help you manage your AP function with less in-house personnel, and will improve retention rates among existing staff, which will ultimately benefit your bottom line. When faced with inefficiencies in your Accounts Payable operations, you may wonder whether to opt for automation or outsourcing and what sets these approaches apart. To see how automation can improve your business outcomes with a scalable solution, request a demo of Order.co. The move to outsourcing requires internal stakeholders to champion the project and take it to completion. There is no hard and fast answer to the question of outsourcing, as the individual needs of your business, your AP volume, and the structure of your current processes will help determine the best course of action. Brace yourself for the grand finale, where we unravel the mysteries of simplified payment processing.
Utilization of Resources and Automation
- So, while you’re laughing at their lightning-fast operations, rest assured that your financial records are in safe hands.
- As an ISO certified company, we prioritize transparency in our processes and maintain open communication channels with our clients.
- AP providers come fully equipped with the tools, skills, and technology not only to manage your existing accounts payable functions but also to integrate new capabilities to give you a more streamlined environment.
- When a company outsources its accounts payable processes, it transfers these responsibilities to a third-party organization that specializes in AP management.
The rules-driven nature of accounts payable processes make these procedures appropriate for third-party management. The assigned outsourced personnel are focused solely on a company’s accounts payable systems. When considering outsourcing, develop a list of potential accounts payable outsourcing companies to evaluate for cost, capabilities, security, data privacy, customer service, and business strength. As vendor relationships grow ever more complicated, more and more businesses will need to rely on outsourced providers to re-architect their accounts payable operations. Before outsourcing AP, review your provider’s privacy policy and data security measures to ensure they meet your standards. If you handle sensitive financial data, rights reserved information, or other proprietary data, be sure your outsourced provider can live up to your privacy needs.
Lower errors and better fraud mitigation
When assessing the cost and value of outsourcing AP services, it’s important to consider not only the upfront costs but also the long-term benefits. If you outsource accounts payable, you can prioritize your internal team’s efforts on strategic initiatives, reduce expenses, and improve oversight of your financial operations. This win-win situation can transform how you manage your accounts payable processes. One of the primary benefits of outsourcing accounts payable is the potential for significant cost savings. When you outsource, you eliminate the need to hire and train in-house staff to handle these tasks, reducing labor costs, employee benefits, and overhead expenses.
They incorporate technologies that identify errors before they become liabilities. In the worst scenarios, a poorly performing accounts payable process can even https://www.simple-accounting.org/ be a liability to your company. Time Doctor is a powerful performance tracking software used by PWC and KPMG to track their outsourced teams’ work activity.
· Efficient reporting
AP solutions are not just for big businesses with a high volume of payments. Whether you outsource to a third-party provider or purchase AP automation software, the cost savings are there. When working with Genpact, businesses can expect a dedicated project manager and a team of experts to handle their accounts payable tasks, ensuring smooth communication and timely execution. By partnering with Genpact, organizations can focus on their core business activities while an experienced team effectively manages their AP processes.
Uptime and accountability – Given that this is their sole purpose, your AP needs will receive a lot of attention. It’s not as if the vendor is a mix of roles from CFO and Controller, to AP Manager and AP Processor, which can happen at smaller firms—one person wearing many hats. Depending on where the vendor is located or if they have a distributed staff, you may find one with near-constant uptime when they are utilizing technology like AP Automation. AP software immediately scans the system for duplicate invoices and rejects anything that looks similar. It’s like having a separate set of digital eyes constantly scanning your entire database to avoid any issues down the road. AP automation software is also designed with features that allow for scheduled payments.
Most companies have an Accounts Payable department, which is essential to keeping finances in line and maintaining healthy relationships with suppliers. Accounts payable functions can include invoice processing, POs, data entry, and more, however a company’s accounts payable workflow is much more than recording invoices and paying them. Maximizing the overall accounts payable process can unlock savings and improve cash flow.
In bottom-performing departments, late payments are all too common as invoice approvals drag for days and AP staff waste about a quarter of their time chasing down missing or inaccurate information. Finance & Accounting unemployment levels have also reached record lows in the U.S. – increasing wages and driving high turnover that the cost of goods manufactured schedule impacts consistency and errors. Additionally, missed or late payments cost your staff time when they have to right the wrong by recovering erroneous spend, which in turn, reduces time available for other AP functions. Ensure that the provider adheres to the relevant industry standards and regulatory requirements.
Flexibility – If you’ve worked in AP long, you know that things don’t always go perfectly. All companies have exceptions processing, but depending on the contract with your AP vendor, they may not. Since their business model is built on low processing https://www.personal-accounting.org/what-are-the-adjusting-entries-for-prepaid/ costs for invoices, they may kick exceptions processing back over to you or your team. These concerns can make it very appealing to outsource some (or all) of the accounts payable function, which ironically, becomes another invoice.
The accounts payable outsourcing partner should also have robust expertise working with a substantial clients base with proven track record of success in your market. The provider’s ability to operate from different locations is a huge added value to cater for the needs of your operations and the varying demand in different sites and time zones. However, partnering with a accounts payable outsourcing service equipped with cutting-edge technology and time-saving tools can help reclaim lost time.
In these cases, there is sometimes a possibility that certain entries will be duplicated. Before outsourcing, it’s wise to educate your employees about the new process so they can work in tandem with your outsourced provider. There’s nothing worse than conducting an accounts payable audit and discovering errors. Depending on the rules that govern your industry, errors could even lead to compliance issues. As the business world expands and supply chains stretch farther and farther across the globe, payments to vendors and other service contractors are becoming even more complicated.
If you’re considering working with one of the many Accounts Payable outsourcing companies, you must weigh the advantages with the disadvantages to make sure it’s the most beneficial decision for your business. You usually need an accountant for less time than a bookkeeper, but when you do need one, they’re invaluable. An accountant is an important resource, not only at tax time but also for regular financial planning and forecasting. While most small businesses don’t need to hire an accounting professional full time, that doesn’t mean you should do it yourself. If you do decide to pay a third party to handle your accounting, be aware of the potential for scope creep.
Join our community of finance, operations, and procurement experts and stay up to date on the latest purchasing & payments content. In fact, the nearshore P2P outsourcing segment alone is expected to grow 26% over the next five years. Countries like Costa Rica have over 300 multinationals with Finance Shared Services Operations supporting North America, The Americas, or in some cases the globe. Accounts Payable is part of the scope of these shared services, in addition to Accounts Receivable and General Accounting that are also very common to find. Finance outsourcing is exploding in the wake of the pandemic – and Accounts Payable (AP) is often the first function CFOs shift to a trusted BPO partner. But with so many possible paths, many finance leaders struggle to understand how to successfully migrate the AP function.