Outsourcing your accounts payable function is a key step to eliminating the mundane, time-consuming tasks that distract your team from what matters most. Look for an outsourcer who wants to develop a long-term partnership with your organization. Priorities should include a commitment to continuous improvement, tangible business outcomes, and a proactive approach to resolving issues enabled by real-time analytics. While cost reduction can be important, it’s rarely the sole motivation for outsourcing AP. In fact, Deloitte reports that COVID challenges have most organizations focused on “standardization and process efficiency” as their top strategic objective in 2021 – downgrading “reducing costs” to the #2 priority. There’s nothing worse than conducting an accounts payable audit and discovering errors.
- We work with leading technology partners such as Oracle NetSuite, Sage Intacct, Intuit QuickBooks, Blackline, Tallie and Bill.com.
- RSM US LLP is a limited liability partnership and the U.S. member firm of RSM International, a global network of independent assurance, tax, and consulting firms.
- It can be difficult and costly for a small business or startup to hire an in-house experienced accountant.
- While mistakes are inevitable with any manual process, duplicate payments cost businesses money; a lot of money in fact.
This reduces the company’s in-house AP workload and frees time for the AP staff to focus on other tasks. Time-saving is not the only perk of AP outsourcing, there are other benefits, but some downsides too. Instead of altering the system, they keep adding personnel to administer it to enter data, follow up on each approval, and spot mistakes made by humans. So, they locate an AP supplier and outsource those services in order to cut costs. In other words, they eventually alter their system by handing it off to someone else.
As with any organizational change, teething issues may arise when a company decides to outsource its AP process. Transitioning from an in-house AP department to an external provider can potentially lead to duplicated entries and other early challenges. To address this concern, it is essential to conduct thorough research on the outsourcing provider’s privacy policies and security measures before initiating any engagement. Ensuring that the provider aligns with the company’s privacy requirements will help alleviate such concerns.
This enables them to cater to all of your accounting needs quickly and accurately, making it a great destination for accounts outsourcing. Double payments can cause disruptions in cash flow management and increased spending. Most third-party AP providers use advanced analytics tools that can help prevent fraud and detect discrepancies between original invoice numbers and actual payment amounts.
Choosing the Best Revenue Cycle Management Outsourcing Firm
Outsourcing vendor management tasks can ensure that vendor relationships are well-maintained. While mistakes are inevitable with any manual process, duplicate payments cost businesses money; a lot of money in fact. It’s not at all uncommon for AP departments to become completely overwhelmed by their workload. This is especially prevalent sales invoice when businesses experience periods of rapid growth, which is often accompanied by an increase in invoice volume. While this is great for sales, it also puts additional pressure on your AP staff. This is especially the case for paper-based processes and those manually entering data, chasing down approvals, and heavy PO-based processes.
- Before outsourcing AP, review your provider’s privacy policy and data security measures to ensure they meet your standards.
- It also ensures records are kept of all financial aspects of purchases made by the company.
- This can ultimately save your organization time and money while maintaining a high level of accuracy and compliance.
- The pandemic further spotlighted the inadequate infrastructure and poor healthcare systems that impact service delivery in many offshore locations.
If you want to keep this part of your business closer to home, check for local AR/AP services in your area. We give you a team of bookkeepers, and simple software to track your finances. We’ll reconcile and categorize your transactions, give you monthly financial statements, and put you in direct touch with your new bookkeeper through our messaging app. Offer suggestions around researching the privacy policies and security measures prior to engaging with the outsource partner. There are two sides to every story, and that means there are some reasons why a company might want to avoid outsourcing the AP process. Moving your in-house AP department to a third-party provider comes with hesitations and is not a decision you should make lightly.
The offsetting credit is made to the cash account, which also decreases the cash balance. The size of the AP department varies a lot in different companies, depending on the size of their business and accounts payable workload. Some AP departments do the work manually, which is very time-consuming and overburdens the AP staff. Accounts payable data outsourcing entails disclosing private information to outside parties, including BPO and bookkeeping details.
Furthermore, onboarding new technology, although necessary, comes with a hefty price tag. Many accounts payable departments are still dependent upon costly and sluggish legacy systems like optical character recognition (OCR). Retraining their workforces and overhauling their internal processes is a costly and burdensome prospect, so it gets put off. In this article, we’ll cover the seven key benefits of accounts outsourcing to India.
Should you outsource your accounts payable?
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. Ask potential providers about their data privacy and security policies and any certifications or audits they may have undergone to demonstrate their commitment to safeguarding your financial information. For instance, you can implement Stampli’s best-in-class AP Automation software and train your team within days. It would take you a week just to set up introductory calls with outsourced vendors.
Prep your in-house team for the change
And, to make sure both the customer and the AP team benefit from the relationship, that outsourced AP team is probably using automation. 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. If they experience any issues that interrupt service for you, there’s little you can do to make sure your own vendors are still getting paid on time. Finance and accounting outsourcing is only the beginning—RSM has the people, processes and technology to transform your finance department and, by extension, your company. AP processes are essential to “keeping the lights on” but generally add little strategic value to a business.
Eliminate the Risk of Errors
You may have hesitations about working with a third-party, or it may not be a reasonable choice in your industry. However, those businesses which can incorporate automation, e-invoicing, and other efficiency tools will gain an edge over their competitors. They’ll even negate many of the problems that have plagued AP departments for decades. Time Doctor is a powerful performance tracking software used by PWC and KPMG to track their outsourced teams’ work activity. Take the time and effort to communicate all changes to your employees — while this may take some time, it’s going to result in smoother processes, which will pay off in the long run.
This could result in payment processing delays, missed deadlines, and other problems that could hurt the company’s relationships with suppliers and vendors. With the technology offered by an accounts payable outsourcing provider, businesses can seize the opportunity to eliminate paper-based processes and significantly reduce manual tasks, such as data entry. This process encompasses tasks such as invoice processing, purchase orders (POs), data entry, and payment management. Effectively managing accounts payable is vital for maintaining financial stability, optimizing cash flow, and fostering strong supplier relationships. Outsourcing the AP function is becoming more and more common as companies realize they can improve operations without making an in-house investment in technology. The world is a big place and sending payments to vendors has become increasingly complicated.
And with many North American organizations having established operations in the region, there is a large talent pool that is familiar with US operational requirements, schedules and pace. Identifying your biggest business drivers at the start – and aligning your leadership team and BPO provider behind them – ensures the greatest value. Despite the myriad benefits of outsourcing your AP processes, it may not be the best choice for you.
disadvantages of outsourcing accounts payable
Outsourcing your accounting and financial admin can unload some of that burden. If these factors of outsourcing scare you, then the automaton of Accounts Payable with P3 Cost Analysts is the solution for you. For example, you lose full control of your business, you have to rely on a third party, and you have to share sensitive information.
An “extension of your team” mentality is important as well, prioritizing regular communication and transparency. In fact, the nearshore P2P outsourcing segment alone is expected to grow 26% over the next five years. Countries like Costa Rica have over 300 multinationals with Finance Shared Services Operations supporting North America, The Americas, or in some cases the globe. Accounts Payable is part of the scope of these shared services, in addition to Accounts Receivable and General Accounting that are also very common to find.
