Introduction

More than money, businesses run on trust. We spend years building trust but lose it on one failed invoice or delayed report. While we can always gain back money, trust, once lost, will spread like wildfire and spoil our reputation. Outsourcing accounts payable is an important part of any business, as it keeps goodwill between the company and its suppliers and vendors. A poorly performing accounts payable processes can be a liability for the company.

Many companies still use outdated methods and applications, such as optical character recognition with paper invoices and checks. To mitigate the risk of error and to become more efficient and cost-effective, small businesses are considering a more modern and logical approach. They are outsourcing these processes to people who specialize in this field. Outsourcing accounts reduces staffing requirements, increases space, reduces cost, and prevents time loss.

What is Outsourcing Accounts Payable?

Outsourcing accounts payable refers to the practice of hiring a skilled third-party workforce to handle the AP processes of your organization. AP providers normally have the tools and skilled people for the job.

Top Advantages of Outsourcing Accounts Payable

Cost Reduction

The problem with in-house accounting is that there are too many overhead costs, which include salaries and benefits of staff, or training for employees. Moreover, new technologies will also bring with it a hefty price. Hence, the cost of processing an invoice might be higher.

More Resources

AP providers know their job and have all the resources to help optimize the process. It includes automation and reporting tools. Rather than acquiring team tools for themselves, small businesses rely on outsourcing accounts payable to get it done at a fraction of the cost.

Integrated Accounting System

The best outsourcing accounts payable firms have modern tools that integrate with your current system to enhance it or give a complete makeover and replace the entire system. Easy integration boosts you with a better start so that you can see value instantly.

Faster Results

AP providers use automation, workflows, and other time-saving tools to deliver results at a fraction of the cost, and are faster than the old technology that your organisation might be relying on.

Stronger Security

In today’s date, even small businesses have to rely on vendors in different locations to deliver their products and goods. With supply chains stretching across the globe, payments to vendors and service contractors are becoming increasingly complicated. The risk of payment fraud and vendor non-compliance is on the rise, and small and medium scale businesses do not have the luxury of employing security experts or extensive audits to end risks. Hence, they are outsourcing accounts payable to more advanced AP experts who cut the risks for them.

Fewer Errors

Errors not only lead to higher costs but also tarnish the reputation of the organisation. This could lead to compliance issues. AP outsourcing companies incorporate the best practices and technologies that identify errors before they turn into liabilities.

Things to Keep in Mind While Outsourcing Accounts Payable

Handing Over Control

When you outsource, you won’t be able to see over the processes as you would in your organisation.

Privacy Concerns

Go through the privacy policy and data security measures of the outsourcing accounts payable firm, especially if you outsource sensitive information.

Data Duplication

The rapid shift to better tools and processes can cause in-house problems if employees still use the old processes. It is important to make sure that the in-house employees and AP firm stays on the same page to prevent data duplication.

Conclusion

AP Outsourcing is changing the way we do business. More and more businesses are using AP providers to architect their accounts payable operation. Hence, we must choose wisely whom we outsource the accounts payable.