These challenges can accumulate over time, creating more significant problems for the organization in the future. In contrast, outsourcing accounts payable presents a solution to address these challenges and positions the company to remain competitive and thrive in the dynamic business environment. To address this concern, it is essential to communicate clearly with the potential outsourcing provider. Emphasize the importance of open communication and transparency throughout the partnership. Seeking a provider that prioritizes regular updates, real-time reporting, and maintains clear lines of communication can help mitigate the apprehensions surrounding the loss of control in the outsourced AP process.
Separate AP departments may not have knowledge of sudden system changes, such as vendor transaction updates, which can result in future errors or duplications. And when it’s time for you to go back and audit the trail of documents, you may have limited access to find where something went wrong. To avoid this risk, you can always install AP automation software that’s run by your own skilled staff. Ineffective AP processes could compromise a company’s reputation and supply chain. If the third-party AP provider you hire is making late payments, the behavior reflects poorly on your brand—and no one else.
To ensure a high quality of work, exceptional providers will also track a broader scope of AP key performance indicators (KPIs) like cycle time and number of invoices processed per FTE. While failing to meet KPIs isn’t a breach of contract, these measurements are navigational tools that provide insight into operations, uncover bottlenecks, and keep outsourcers on track to meeting SLA objectives. While accounts payable outsourcing is a viable option for some organizations, many can get the benefits of outsourcing while maintaining higher efficiency and security using a procurement platform.
No matter your current accounting system, the best accounts payable outsourcing firms have the tools to integrate with it. If you’re fed up with your current system, a provider can even help you onboard a new one.Easy integration helps you get started quickly so you can see value immediately. When complications occur in your accounts payable processes, they can hamper your business growth.
This integration eliminates manual data entry and reduces the likelihood of data entry errors and inconsistencies. Outsourcing your accounts payable function resolves these challenges and more, with Deloitte reporting that 65% of successful organizations include outsourcers in their delivery model. Errors in accounts audits can lead to significant costs 56% of employees take a lunch break of 30 minutes or less and compliance issues for businesses. Many of these errors stem from manual data entry and a lack of control over Purchase Order requisitions, approvals, and deliveries in the accounts payable process. For a business, its accounts payable and T&E processes have a huge impact on its cash flow, regulatory compliances and supplier relationships.
They evaluate your current accounts payable workflows, identify areas for enhancement, and implement best practices to optimize processes, reduce errors, and increase overall efficiency. Outsourced accounts payable services are scalable to meet the requirements of your business. Whether you experience seasonal fluctuations or significant growth, a dependable outsourcing provider can adjust their services, resources, and technology to meet your evolving needs. Yes, outsourcing accounts payable services can be advantageous for businesses of any size.
For example, back-office employees don’t have to spend hours on manual data entry, recording disbursements and bookkeeping. Most businesses still use outdated and expensive systems like optical character recognition (OCR), or even paper invoicing, to manage their AP processes. Ask potential providers about their data privacy and security policies and any certifications or audits they may have undergone to demonstrate their commitment to safeguarding your financial information. But by considering factors such as cost, scalability, and the level of control desired, you can make an informed decision about the best approach for your business.
If a third-party company experiences mismanagement or bankruptcy, it may disrupt your accounting services and affect vendor relationships. Outsourcing accounts payable relies on a third party to manage this crucial accounting function. As with any organizational change, teething issues may arise when a company decides to outsource its AP process. Transitioning from an in-house AP department to an external provider can potentially lead to duplicated entries and other early challenges. To preempt these issues, it is advisable to conduct an internal meeting with staff before implementing any changes. This meeting should focus on discussing the chosen outsourcing partner, its impact on workflow, and proactive measures that employees can take to ensure a smooth and seamless transition.
In-house accounts payable is the traditional way of handling a business’s accounts payable and invoice-to-payment processes. Despite requiring complete management and retention of the in-house account payable department, in-house accounts payable allows full control of all the transactions and overall financial performance of any cash-out. In essence, it simplifies each invoice, making them easily accessible, traceable, and paid promptly.