Get in touch with one of our experts and see how outsourcing can fit into your accounting strategy. You’ve scoured the internet for blogs about outsourcing and you’ve consumed enough pertinent information to make a well-thought-out decision. However, before you make that next move you want to know if it’ll work for your business.
How to Choose the Right Accounts Payable Service Provider
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 costs for invoices, they may kick exceptions processing back over to you or your team.
- In essence, it simplifies each invoice, making them easily accessible, traceable, and paid promptly.
- Inquire about their ability to handle fluctuations in workload, accommodate process changes, and provide additional services as needed.
- Once you’ve set your sights on outsourcing, the road to choosing a provider might get a little bumpy.
- AP automation software reports any exceptions immediately, as they happen in real-time.
- Outsourcing accounts payable takes most of this workload off of your AP team supervisor.
Evaluating Potential Providers
They ensure the timely collection of payments from your customers for products or services sold (AR), and management of the money you owe to vendors (AP). Being able to hand over crucial AP responsibilities may be good but it comes at a cost. The fact is you become heavily dependent on the outsourcing provider for accounts payable services that involve vital transactions. So if the provider faces challenges such as security breaches or even bankruptcy, then your company processes could come to an abrupt standstill. Companies offering accounts payable services focus only on your AP processes; completing the work faster and more accurately. Also, with AP processes being taken care of, your employees can focus on higher value tasks with increased efficiency leading to better productivity overall.
Vendor management
Properly transferring knowledge from one team to the next – and bringing documentation up-to-date – is critical to avoiding gaps in service. 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. Join our community of finance, operations, and procurement experts and stay up to date on the latest purchasing & payments content. To see how automation can improve your business outcomes with a scalable solution, request a demo of Order.co. 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.
Where to Outsource Accounting
- This efficiency enables companies to capitalize on early payment discounts and avoid costly late payment penalties.
- For instance, signing contracts with other companies may take time and extra effort from a firm’s legal team.
- 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.
- Managed AP services can offer reporting on cost per invoice and time to payment among others, and routines such as analysis, month and year-end close, reconciliation, and AP document management.
- Since their business model is built on low processing costs for invoices, they may kick exceptions processing back over to you or your team.
- By leveraging the skilled workforce available in the LatAm region, businesses can access top-quality accounts payable professionals at a fraction of the cost of hiring in-house staff.
- As an organization grows or shifts its strategic focus, the outsourcing engagement may need to be modified to accommodate new needs or priorities.
This is in addition to all of the other financial tasks you need to take on to keep the business growing. Accounts payable outsourcing is the process of hiring a specialised service provider who can take over multiple AP functions that businesses find difficult to handle in-house. Most manual processes are susceptible https://www.bookstime.com/ to errors, and inefficiencies in these processes can result in significant financial losses due to duplicate payments, late payment fees, and missed discounts. Furthermore, the absence of a proper audit trail can adversely impact your finances and render your company vulnerable to fraudulent activities.
Potential Communication Challenges
As we mentioned earlier, verifying potential AP outsourcing providers’ security and compliance measures is crucial to ensure that your organization’s sensitive financial information is protected. Evaluate the provider’s internal controls, anti-fraud measures, and adherence to accounting principles and regulations to gauge their commitment to data security and compliance. So while implementing an accounts payable automation system in-house can help reduce invoice processing costs and improve efficiency, you will still have to have in-house employees dedicated to AP functions. Therefore it’s unlikely to provide the same level of cost reduction as outsourcing.
- Improved efficiency in accounts payable processes can also lead to better cash flow management and a more strategic use of financial resources.
- A manufacturer of personal computers might buy internal components for its machines from other companies to save on production costs.
- The fact is you become heavily dependent on the outsourcing provider for accounts payable services that involve vital transactions.
- Being able to hand over crucial AP responsibilities may be good but it comes at a cost.
- However, it’s essential to carefully consider the pros and cons of AP outsourcing to determine if it aligns with your company’s unique needs and financial goals.
Thus, it can be seen that companies are embracing accounts payable outsourcing to overcome challenging economic conditions. Nevertheless, let us weigh the benefits of outsourcing against the potential risks to determine accounts payable outsourcing whether accounts payable outsourcing is the right step for your business. Improved efficiency in accounts payable processes can also lead to better cash flow management and a more strategic use of financial resources.