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 statement sections business, your AP volume, and the structure of your current processes will help determine the best course of action. That data is then stored on their internal servers or in a data center via the cloud.
- If your business is making do with paper invoicing and optical character recognition (OCR) to manage your AP processes, you already know the challenges of outdated systems.
- 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.
- Our team has extensive knowledge and proficiency in managing all facets of accounts payable, including invoice processing, payment administration, and vendor relations.
- Outsourcing presents a unique opportunity to completely revamp the AP process while also freeing up time and money.
- If you don’t have access to technologies that give you AP automation, workflows, and other time-saving tools, your outsourced provider can step in to deliver them at a fraction of the cost.
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. For most small companies, it makes sense to handle your accounts payable internally, particularly when you are a new business. It is a cost-effective way to process your payments when there are not too many transactions.
How to Outsource Your Accounts Payable in 5 Key Steps
But as a general rule, that’s because they’re using more efficient technologies. Accounts payable outsourcing and accounts payable SSC are usually seen as similar options offering almost identical models to businesses, but there are also some notable differences to clarify here. Our Accounts Payable workflow has generated daily volumes of invoices to be processed, and Outsourced Bookkeeping handles the volume precisely. According to research, the global accounts payable automation market is set to reach USD 1,567 million by 2025.
Accounts payable (AP) outsourcing is a financial strategy in which a company entrusts the management of its accounts payable processes to a third-party service provider. Outsourcing may help your company cut costs and improve services, but over-dependence on third-party providers introduces more risk. If a third-party company experiences mismanagement or bankruptcy, it may disrupt your accounting services and affect vendor relationships. 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.
If you haven’t realized it already, the benefits of outsourcing accounts payable are limitless. Outsourcing presents a unique opportunity to completely revamp the AP process while also freeing up time and money. Now, depending on how efficient that service is and how many hours you need from them, they still might be more cost effective than automating your own AP processes and maintaining a lean AP team.
You would rather pay for an AP service rather than hire more AP staff
Before you invest significant time, energy, and money to hire another person, consider ways your existing processes can be streamlined. Evaluate if that extra workforce is essential before taking on the weeks or more long hiring and training process. An influential AP workflow is essential to any business, starting with submitting supplier invoices. AP clerks must ensure accuracy by verifying documents and coding them for recording in a general ledger before proceeding further. Balancing the need for flexibility with sound business practices is paramount; keeping vendors happy by regularly paying expenses on time is essential. Ultimately, the right choice will enable your organization to manage accounts payable efficiently and contribute to its overall financial success.
Cons of accounts payable outsourcing
In addition, you’ll enjoy the same availability of your data, the same control over compliance workflows, the same detailed invoice and payment tracking, with the same standardization of your AP process. You’ll benefit from the performance improvements of automation whether you keep your payable processes in-house or hire a professional. Instead of changing the system, they require more and more people to manage it—to perform data entry, to track down each approval, to catch human errors. An AP outsourced business solution might sound like it operates more efficiently, so it can improve your bottom line.
There are several early signs that you should constantly be on the lookout for. If you are facing too many errors, dealing with high operational costs or find it difficult to recruit and retain payables staff, then you must consider AP outsourcing for your business. Perform a thorough cost-benefit analysis to determine whether outsourcing accounts payable makes financial sense for your organization. Time zone differences, language barriers, and miscommunication can potentially impact the efficiency and accuracy of your accounts payable operations. When outsourcing, you’ll be working with an external team or provider, which can sometimes result in communication challenges.
Best for (Mostly) Free Outsourcing Accounts Payable
Essentially, AP process outsourcing transfers tasks and responsibilities to another company for efficient management. AP automation uses business intelligence software to manage your in-house systems (with lower total costs on your part). When you outsource accounts payable, a third-party company runs your AP department. With AP automation, your in-house accounts payable team uses a sophisticated platform to streamline your internal AP systems.
In-House Account Payable Management
Companies must carefully manage the Accounts Payable process to prevent fraud, pay vendors on time, maximize cost savings and maintain compliance with internal controls. An increase in Accounts payable indicates the business has been buying more goods and services on credit. At the same time, decreases point to faster payments of prior obligations – crucial insights into current financial health.
We’ll break it down so businesses can make smart decisions about whether to jump on this financial trend or give it a pass. But before we get into the details, let’s get a grip on what accounts payable outsourcing actually means. AP processes are essential to “keeping the lights on” but generally add little strategic value to a business. Outsourcing your accounts payable function is a key step to eliminating the mundane, time-consuming tasks that distract your team from what matters most. Challenge potential partners to detail a robust transition process that includes documentation, effective training, change management, and a structured solution for deploying automation tools. Make sure you understand how the transition will occur, how you will know it’s completed, and how the outsourcer measures success.