Even before COVID, the drumbeat had started to modernize Finance Departments by offloading transactional, low-value work. But the pandemic accelerated the pace – creating mounting pressure for CFOs to minimize costs, maximize productivity, adjust to a remote workforce, and increase their team’s focus on more strategic activities. When you outsource, you don’t have as much visibility over the process, nor do you have as much control over how the process works. As you outsource AP tasks that were previously carried out by the in-house team, your employees might have different responsibilities and day-to-day tasks. However, if you are clear on the benefits of Accounts Payable outsourcing, and genuinely dedicated to establishing a working relationship with your vendor – you can pave the way to success together. The most efficient SLAs focus on one or two carefully chosen metrics for each function in a contract to evaluate an outsourcer’s performance.
- While outsourcing accounts payable has pros and cons, the potential benefits outweigh the downsides for most organizations.
- By evaluating potential providers’ capabilities, assessing cost and value, and verifying security and compliance measures, you can select the best accounts payable service provider for your business needs.
- A company can hire a consultant for a specific project or on a contract basis.
- By partnering with us, you can refocus your organization’s resources on core business operations, secure in the knowledge that your accounts payable are in capable hands.
- These concerns can make it very appealing to outsource some (or all) of the accounts payable function, which ironically, becomes another invoice.
Outsourced accounts payable services employ stringent quality control measures to guarantee data accuracy and reduce errors. This includes a comprehensive review of invoice information, the implementation of validation checks, the use of automated data capture technologies, and regular audits to maintain data integrity. All accounts payable processes adhere to industry regulations and internal controls to ensure precision, data integrity, and compliance. Our stringent verification procedures, comprehensive documentation, and accurate financial reporting ensure compliance with applicable financial regulations and standards.
Some companies consider handing this information to an external entity a significant security risk. That’s why it’s equally important to research a provider’s privacy policies, security measures, and track record before proceeding. AP automation is one way to virtually eliminate these errors by removing the need for manual input in highly repetitive tasks where mistakes are most common. The problem is that it can be difficult for organizations without the expertise to implement automated AP workflows. Accounts payable outsourcing is a handy solution for companies to make their AP processes efficient & cost-effective.
Service providers use their own accounting systems, processes, and methodologies to execute AP tasks in a way that’s as efficient, accurate, and cost-effective as possible. The world is a big place and sending payments to vendors has become increasingly complicated. Companies, especially small to medium-sized ones who don’t have their own security teams, are plagued with security issues. An AP outsourcing provider bridges the gap by providing sophisticated security measures and technology for AP processes that reduce the chances of a company experiencing something like payment fraud. With the right provider, companies can streamline their business operations, refine their processes and grow revenue.
Save time and increase efficiency
When upper management is looking at these costs from a high level, they will likely be interested in exploring all options for reducing those costs for invoice processing, including outsourcing. Outsourcing allows you to focus on core operations while freeing up resources for other business retained earnings on the balance sheet functions. If your team can create value elsewhere in the business by moving to an outsourced AP model, outsourcing might make sense. By selecting a reliable provider and implementing additional security measures, businesses can reduce the likelihood of data breaches and financial losses.
This can include tasks such as reviewing and verifying invoices, processing payments, reconciling vendor statements, and resolving discrepancies. One of the advantages of outsourcing is that you have flexibility to get the services you need without having to pay for those you don’t. Typically, an outsourced services provider will start with an assessment to determine what you need and how best to help you reach your goals.
Many business leaders expect a huge headache in switching from a traditional AP system to a more practical automated one. The implementation alone would be a nightmare, not to mention extremely costly. 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.
Invensis – The Most Trusted Accounts Payable Outsourcing Services Company
AvidXchange offers purchase-to-pay solutions for a variety of industries, including real estate, construction, financial services, health care, technology, and software. Partnering with accounts payable services providers can bring benefits to your business. Accounts payable solution providers can assist you in managing your accounts payable processes. By hiring a third-party vendor, you can leverage the latest technologies to streamline your workflows.
Comparing Accounts Payable Outsourcing vs. Accounts Payable Automation
While outsourcing helps a company cut costs and improve its service levels, it can often limit their independence. Most in-house teams have a financial supervisor, such as the CFO, to manage issues when employees aren’t present. While you have to hire employees and spend time training them, you also need to purchase the tools required to do the job! However, this flexibility to pay later must be weighed against the ongoing relationships the company has with its vendors. Failing to achieve KPIs isn’t a breach of contract, yet these measures are navigation tools that give insight into operations and help keep outsourcers on track to meet service-level agreements. An Accounts Payable SLA might demand that the BPO provider achieve an accuracy rate of 98% when processing bills.
Reasons Why You Should Hire a Virtual Office Manager
These concerns can make it very appealing to outsource some (or all) of the accounts payable function, which ironically, becomes another invoice. It’s not at all uncommon for AP departments to become completely overwhelmed by their workload. This is especially prevalent when businesses experience periods of rapid growth, which is often accompanied by an increase in invoice volume.
AvidXchange offers a full range of accounts payable and payment automation services. By automating your payables, you can save up to 60 percent on processing expenses and gain better control over your invoices and payables. A company purchases items on credit which then needs to be paid back in a set amount of time. Essentially, it’s an IOU, and involves the combination of travel expenses, vendor payments, and operating costs.
Accounts payable (AP) refer to the obligations incurred by a company during its operations that remain due and must be paid in the short term. Typical payables items include supplier invoices, legal fees, contractor payments, and so on. A payable is created any time money is owed by a firm for services rendered or products provided that has not yet been paid for by the firm. This can be from a purchase from a vendor on credit, or a subscription or installment payment that is due after goods or services have been received. For example, if a restaurant owes money to a food or beverage company, those items are part of the inventory, and thus part of its trade payables.
However, it also accompanies a few disservices, including loss of command over the records payable, correspondence difficulties, and security gambles. With any change comes some hiccups and there might be some initial challenges when outsourcing the AP process. When a company takes its AP department from in-house to outsourced, there is the possibility that entries will be duplicated. Before any changes take place, it would be wise to hold an internal meeting with staff to discuss the outsource partner, how this will affect workflow, and what employees can do to ensure a seamless transition.
Accounts payable outsourcing to a third-party service provider may be a cost-effective and efficient solution, allowing access to experience and innovative technology. However, it has particular potential drawbacks, such as loss of control and security threats. Businesses can process payments more quickly and accurately thanks to automated accounts payable systems that handle large invoices and supplier data.