The accounts payable department is responsible for managing any invoices or due payments for vendors and suppliers the business works with to provide material, products, services, or other goods. If your current accounts payable process has considerable cash leaks or issues, moving to outsourced AP may improve budget optimization even after the cost of service fees. The average cost to process an invoice is as high as $15, and outsourcing or automation may offer up to a sixfold reduction in processing costs.
Coping with changing international tax regulations requires a dedicated specialist to ensure compliance. Accounts payable outsourcing provides a dedicated point of contact for vendor questions and disputes. They promptly respond to vendor inquiries, resolve payment discrepancies, and have open communication channels to cultivate positive relationships with suppliers.
Things to look for before Outsourcing accounting function
When outsourcing, you’ll be working with an external team or provider, which can sometimes result in communication challenges. 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. We are extremely pleased with the exceptional hospital billing services provided by Invensis.
- It also creates an accounting system that is fast and accurate, which in turn streamlines a company’s workflow.
- Moreover, invoice processing speed is limited by your staff’s abilities and work hours.
- Accounts payable outsourcing can help smoothen the AP process while ensuring that payments to vendors are cleared efficiently.
- 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.
- Dependency – While it’s great to be able to hand off a responsibility you don’t like or can’t fulfill, it also makes you rely on that vendor.
Then, agree scope of of work with outsourcing accounting services provider, such as a better cash management system or just keeping track of profits or filing tax returns only. You shouldn’t feel obligated to sign a binding contract while using outsourced accounting services. When the number of invoices becomes too much to deal with internally, it may be time to outsource. Not only could you miss payments, but you could also make errors, leading to compliance mistakes. The outsourcing procedure typically begins with a consultation to assess your unique accounts payable requirements. After defining the scope and requirements, the outsourcing provider will develop a custom solution and transition strategy.
Outsourcing accounts payable involves sharing sensitive financial information with a third party. While reputable providers implement stringent data security measures, there may still be concerns about data privacy and the potential for data breaches. Some businesses prefer to maintain full control over their accounts payable processes to ensure they align with their specific needs and priorities. By leveraging their expertise, you can ensure that your accounts payable processes are efficient, accurate, and compliant with industry regulations. QX Global Group is a global consulting, digital transformation, and business process management (BPM) services company that partners with organizations seeking to transform and optimize their business operations. Since 2000, Invensis has been catering to the diverse outsourcing needs of clients for multiple industries and constantly striving to add value to clients’ businesses.
By selecting a reliable provider and implementing additional security measures, businesses can reduce the likelihood of data breaches and financial losses. 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. The most common AP processes that are outsourced are purchase order or invoice matching (0r 3 way matching), invoice automation, discrepancy resolution, and AP administration.
We’re all guilty of it, having that ‘I’ll just do it myself’ mentality, and sometimes it works to our advantage, and sometimes it doesn’t. 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 decision to revenue streams in the business model is a strategic one that depends on your organization’s unique needs, resources, and goals.
How do I choose an AP outsourcing provider?
If you’re at that point with your accounting department, there are options out there to help. Outsourcing invoicing and other administrative tasks away from your Accounts Payable team can ensure they’re not overwhelmed and have time to focus on other tasks. You should also pick partners used to working with similarly sized organizations. With less scale, smaller enterprises need more flexibility from outsourcing partners than multinational corporations. Larger outsourcers are less willing and able to customize solutions because their operations are structured to handle large volumes.
Enhanced visibility and control
According to one study by the American Productivity and Quality Center, the bottom 25% of organizations surveyed were paying $10 or more for each invoice they processed. To streamline your AP processes, your data submission systems will need to be updated. Ensure your employees are up to date with these to avoid errors or duplication. It’s essential to prepare your in-house employees before outsourcing your accounts payable tasks. It’s easy to supervise your in-house invoice processing activities as your employees are always visible and accessible. While you have to hire employees and spend time training them, you also need to purchase the tools required to do the job!
The Pros of Outsourcing Accounts Payable Processes
AP automation is the implementation of technology within a company to expedite the AP process and reduce paper invoice reliance. With years of experience in the accounts payable industry, APS has developed a thorough understanding of the specific needs of various business sectors. We have served clients in numerous industries, such as manufacturing, healthcare, retail, and finance, among others. This industry expertise enables us to contribute valuable industry knowledge and best practices to your accounts payable operations.
Emergencies can be prioritized and handled straight away with direct approvals. With a third-party provider, you will have to play by their terms and timings. They might be located far away and the lack of transparency in processes can become a serious issue. Accounts payable outsourcing can increase the efficiency of your AP processes by streamlining vendor invoices and payments. Since everything is organized, you can also make early settlements of vendor bills to get better discounts.
With the right provider, companies can streamline their business operations, refine their processes and grow revenue. Rapidly growing organizations often end up struggling with manual, paper-based accounts payable processes which can drain onshore resources and drive the focus away from strategic tasks. Working with an experienced payable outsourcing partner allows businesses to leverage the right people, processes and platforms. This in turn, can bring about a whole range of benefits such as technology implementation, process reengineering and reduced operational costs. The process of delegating ap outsourcing services to a third-party provider that handles the payment of a company’s bills and invoices is known as accounts payable outsourcing.