Why outsource accounts payable
When it comes to your company’s accounts payable process, outsourcing it through an accounting service that provides AP automation could mean the difference between a thriving and struggling business. Of course, outsourcing accounts payable may not be for everyone, but it’s certainly worth exploring.
The good news is that there are a lot of options out there when it comes to choosing an AP provider. Here are some tips on how to pick the best one:
- Look at their customer reviews. You want to make sure that whoever you choose has had plenty of success with other clients and gets great feedback from them.
- Ask if they offer any kind of guarantee on their service.
- Ask if they offer training or support for those who need help getting started with their system (this will depend on what kind of client you are).
Challenges of having in-house accounts payable
If you’re managing your AP department on your own, you’re most likely overwhelmed. Especially if you’re a small business and with piles of invoices coming in each day.
The top challenges holding AP back are exceptions, lengthy invoice approval times, and too much paper. Another big challenge is the amount of time staff spends on handling supplier inquiries. By not solving these tactical and manual-based issues, companies cannot expect to extract value from its AP departments, which means lowering processing costs, improving workflow, driving back office efficiencies, and making better-informed decisions all fall to the wayside.
Outsourcing accounts payable: The benefits
Handing over the reigns of your accounts payable may seem a bit nerve-wracking, but outsourcing accounts payable to a trusted partner has the potential to offer tons of advantages like:
Saving time and money.
The process of managing your accounts receivable is often overlooked, but it can be one of the biggest expenses for small businesses. If you outsource this process, you can focus on other aspects of your business and bring in new business opportunities.
Access to new payables solutions and tools.
You might not have time or money to invest in new technology, so outsourcing this aspect of operations could be an attractive option. Providers have access to new tools that will help them streamline your current processes and improve workflow while freeing up time for more strategic decisions.
Improved security.
Outsourcing accounts payable means more control over sensitive data and information related to payments, which means increased security for everyone involved.
With the right provider, companies can streamline their business operations, refine their processes and grow revenue. An established accounts payable service provider will enhance cash flow and make the overall AP process more efficient, which in turn will lower costs and build stronger operational relationships.
Accounts payable vs Accounts payable automation
When your Accounts Payable operations just aren’t cutting it, you may be asking if you should automate or outsource your Accounts Payable process. And what is the difference?
Automation streamlines invoice processing workflows, from invoice receipt to approval routing, to PO and receipt matching to the invoice, to review and exception management, to final approval for payment. In a nutshell, it simplifies each invoice so that they’re readily available, tracked, and paid on time.
When automating accounts payable, a company will rely on a third-party software to automate the process. But the business keeps all AP processes in-house and requires staff training within the AP department.
Outsourcing your AP is a bit different than this model. As previously mentioned, it involves hiring a third-party provider to manage all AP operations. It avoids the cost of adopting accounts payable software at significant cost savings for both companies.
Pros of outsourcing accounts payable
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.
Imagine paying your employees to do something that used to take you hours a week. Imagine paying for those employees’ training costs and benefits as well. Now imagine paying those same employees less since they aren’t doing anything you don’t want them to do anymore.
That’s what outsourcing accounts payable can do for your business! It provides you with a way to cut down on costs and make more money in the long run by taking away from what used to be your biggest expense: payroll expenses.
Secure invoice processing
Companies are facing a new challenge: how to pay vendors in a secure and cost-effective way. 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.
AP outsourcing providers offer industry-leading solutions for payment processing, including:
- Secure data storage and sharing
- Preventing unauthorized access to sensitive information
- Securing legacy systems from cyberattacks
- Enabling remote access to critical systems
Quicker Turnaround
There is never enough time in the day, but utilizing an accounts payable outsourcing service that has access to the latest technology and time-saving tools puts some time back on the clock. It also creates an accounting system that is fast and accurate, which in turn streamlines a company’s workflow.
For example: Say you have a team of people working on different projects at different times of the day. If you hire a service that works around their clients’ schedules, then your team will spend less time waiting for tasks to complete or getting stuck waiting on one another. This can be especially beneficial when it comes to large projects that require multiple tasks to be completed at once.
The bottom line? Outsourcing can help save your company money by reducing its overhead costs—and give employees more time for growth and development!
Cost savings
Outsourcing your AP process is cheaper than other solutions.
If you’ve ever tried to implement a process like this on your own, you know how tricky it can be. It’s not just about the time spent implementing the new system—it’s also about all of the time spent training employees and updating systems. In addition to all of that, there are often high overhead costs associated with hiring staff members and keeping up with training them over time as well.
But when you outsource your AP process, none of those things apply! The third-party provider is already equipped with the people and tools needed to streamline your AP process for you, so there’s no need to hire any additional employees or spend any more time training them than necessary. These cost savings contribute to improved cash flow and the overall financial health of the business—which means that if you’re looking for an efficient way to implement an AP process in your business, outsourcing may be just what you need!
Lesser errors
When you work with a professional outsourced company, you can expect to see an improvement in your accounts payable process. Even the slightest error discovered in an audit can lead to not only costs but also compliance issues. Manual data entry and the lack of control around Purchase Order requisitions, approval and delivery account for many accounts payable errors.
Professional outsourced companies will incorporate advanced technologies, systems and processes in order to identify, remove and mitigate any errors before they become an issue.
Bottom line
The idea of outsourcing the accounts payable process may seem a bit foreign at first, but it is actually more common than you might think. Many companies hand the work off to outside providers rather than processing it in-house. There are numerous reasons for this and we have highlighted three of them here; some companies outsource because they do not have anyone internally with the experience or education to do the job well.
Outsource accounts payable firms will often be better equipped with resources to handle these types of tasks. The second reason that many companies will outsource their accounts payable work is control, especially when it comes to paying bills for service providers such as marketing agencies and web designers. They need to keep track of how much money was spent and on what, if and when specific invoices should be paid and so on. Finally, and probably most importantly, headquarters are not always near their service providers, which makes the traditional approach a bit problematic. Also, employees find it easier to get behind on things because they don’t feel like they’re working on other activities alongside their AP functions during the normal course of business.
If you’re ready to streamline your accounts payable process and give your employees some breathing room to focus on the things that grow your company, then send us a message today! Our experienced accounts payable specialists will be ready to take help you out as soon as possible!
