While there are many benefits to outsourcing accounts payable processes, it’s important to also consider the potential drawbacks and concerns that may arise. Below, we explain why you need to consider the following three areas and what you can do to mitigate any potential challenges. The growing popularity of accounts payable outsourcing and accounting outsourcing, in general, can be attributed to a sustained need to make cost savings and compensate for labor shortages. Companies are embracing business process outsourcing (BPO) as a strategic solution to overcome challenging economic conditions. With outsourced accounting services, you have multiple pairs of eyes on your transaction processing and reports, which provides increased internal controls. While fraud can never be ruled out 100%, a dedicated team with specific expertise in accounting best practices will be far more likely to spot an anomaly than one person who’s probably overburdened and overloaded with work.
- Else, we will flag dubious payments and those that remain outstanding for further inquiry.
- However, those businesses which can incorporate automation, e-invoicing, and other efficiency tools will gain an edge over their competitors.
- Outsourcing can solve some of the issues that come with the rapid growth of your business.
- Your accounting services may be interrupted, and vendor relationships may be impacted if a third-party company experiences poor management or insolvency.
AP outsourcing usually involves several changes to your accounts payable processes. As most outsourcing providers charge per invoice, duplication errors can be quite costly. And as these providers could be thousands of miles away, keeping track of these duplicates can be difficult.
The Pros of Outsourcing Accounts Payable Processes
That’s because it’s easy to manipulate the books, or have a fake expense go unnoticed for months, or even years. There are multiple warning signs that can indicate fraud and are oftentimes because of a hardship an employee’s going through, where they feel financial pressure and don’t know what else to do. Don’t just blindly trust your employee without any controls or accountability – it’s a surefire sign to leave you wide open for fraud. Outsourced accounting, bookkeeping, and controller services have become a more common solution for small businesses today. The advantages, which once were only enjoyed by mid-market and enterprise companies, are becoming understood by smaller companies. We capture all summarized records of payments owed to vendors for ease of tracing transactions and record-keeping to improve compliance.
- However, if it’s total visibility into the accounts payable process you seek, automated AP software may be your best bet.
- It is, therefore, of paramount importance for the company to bring its Days Payable Outstanding to the optimal level, which is possible only through system automation and integration and tracking of key metrics.
- However, not investing in some form of AP support will cost you more in the long run.
- So when the invoices stack up, it’s time to take a moment and create a game plan to scale your Accounts Payable department in the best way for your business.
As geopolitical and macroeconomic concerns increase, this survey-based Economist Impact-GEP report looks at what companies are doing to manage the resultant supply chain challenges. The best outsourcers regularly hold monthly service level reviews, ensuring stakeholders get to the bottom of issues and resolve them quickly. The most effective SLAs measure an outsourcer’s performance through one or two carefully chosen metrics for every function in a contract. 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.
Choose the right service provider
Time Doctor is a powerful performance tracking software used by PWC and KPMG to track their outsourced teams’ work activity. While outsourcing helps a company cut costs and improve its service levels, it can often limit their independence. However, when you outsource the task to a third-party provider, error reporting can be problematic. Most in-house teams have a financial supervisor, what is backflush costing 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! With any paid service, scope creep can happen where one task ends up snowballing into multiple, and it can result in additional costs you weren’t initially aware of (or forgot about).
The comprehensive guide to accounts payable outsourcing
The accounts payable outsourcing partner should also have robust expertise working with a substantial clients base with proven track record of success in your market. The provider’s ability to operate from different locations is a huge added value to cater for the needs of your operations and the varying demand in different sites and time zones. A shared services center (SSC) is a centralized and consolidated business unit that provides services for multiple units within the same organization and/or numerous entities simultaneously. Accounts Payable SSC is a unit that handles all accounts payable transactions for more than one business unit within the organization, and sometimes, they control the invoice-to-payment processes for several entities. AP automation is possible when subscribing to a SaaS solution, adopting a dedicated accounting software, or adopting an ERP system on-premises.
Improve Vendor Relations
Choosing a reputable third-party processor is an essential step in reaping the benefits of outsourcing your AP tasks. The move to outsourcing requires internal stakeholders to champion the project and take it to completion. This leaves your AP team free to attend to the value-creation activities of the business. Explore 7 proven accounting best practices for businesses to navigate the financial landscape with confidence and realize growth and stability.
Third-party accounts management companies have modern facilities and software to efficiently and accurately accomplish tasks. 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. As a specialized accounts payable outsourcing services company, we have been successfully delivering customized accounts payable services that are suited to the specific needs of each business.
Our Accounts Payable Services
The best partners can readily identify challenges in the full AP lifecycle and are experts at implementing process improvements and best-in-class tools to resolve them. They are also able to take the end-to-end AP process and not just the most basic activities of invoice coding and processing. For example, at Auxis, our AP outsourcing teams are able to perform many other AP functions including vendor master maintenance, vendor communication and inquiries, payment proposal preparation, reconciliations and more. Outsourcing your accounts payable function resolves these challenges and more, with Deloitte reporting that 65% of successful organizations include outsourcers in their delivery model.