An increasing number of businesses are outsourcing their accounts payable processes to a specialized third-party team. Flexibility – If you’ve worked in AP long, you know that things don’t always go perfectly. All companies have exceptions processing, but depending on the contract with your AP vendor, they may not. Since their business model is built on low processing costs for invoices, they may kick exceptions processing back over to you or your team. Increased resources – Outsourced AP solutions are generally going to come equipped with technology (i.e. AP Automation platforms) to handle their workflows. This means that they’ll have systems in place to handle both a PO-backed or non-PO process, discrepancy resolution, vendor management and sometimes administrative support.
- These include delegation of responsibilities, implementation of new software, and changes in the submission systems.
- Accounts payable outsourcing is the contracting of the entire outgoing payment process, or Accounts Payable (AP), to a third-party provider.
- This entails evaluating and processing employee expense reports, confirming supporting documentation, and reimbursing employees for valid business-related expenses.
- Delegating these tasks to an AP outsourcing company gives a business more time to focus on other pressing matters.
By partnering with professional outsourced companies, businesses can benefit from the integration of advanced technologies, systems, and processes. These solutions are designed to identify, eliminate, and mitigate errors before they escalate into problems, ensuring a seamless and error-free accounts payable process. A company purchases items on credit which then needs to be paid back in a set amount of time. Essentially, it’s an IOU, and involves the combination of travel expenses, vendor payments, and operating costs. 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.
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Reputable accounts payable outsourcing services provide real-time access to your accounts payable data and transparent reporting. You can view payment status, monitor invoice processing, and access pertinent financial information, allowing you to make informed decisions. 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 economic and accounting profit formula stability, optimizing cash flow, and fostering strong supplier relationships. Service providers who manage outsourced accounts payable will already have the tools needed for the job, including software, document management, and reporting tools. AP automation can and should be included in this package, which unlocks value in the various accounts payable processes like invoice processing, ERP integration, and payment and remittance management.
- As your business grows, managing a good relationship with your vendors and suppliers is critical to your success.
- Corcentric’s wide range of product solutions such as accounts payable outsourcing, invoice processing, as well as accounts receivable, makes us an essential part of the success of any company.
- Anything that you spend money on–whether it’s your monthly lease payment, utilities, office supplies, or postage fees–should be recorded in your accounting system.
- 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.
However, some practices can be followed to ensure that businesses partner with the proper accounts payable outsourcing provider. By evaluating potential providers’ capabilities, assessing cost and value, and verifying security and compliance measures, you can select the best accounts payable service provider for your business needs. With the right partner in place, your organization can unlock the potential of accounts payable outsourcing and drive the success of your financial operations. Genpact provides a comprehensive range of AP outsourcing services, including invoice receipt and processing, vendor management, and payment processing. They strive to offer cost savings, improved efficiency, and increased visibility and control for their clients.
Greatly improves efficiency
A business can opt for what it wants to outsource depending on the magnitude of work and budget involved. AP processes, if interrupted due to employee absence, can multiply and burden the business. Outsourcing providers have an adequate workforce (and backup teams) to step in and manage your AP processes. Organizations dealing with sensitive financial data may be hesitant to use a third-party vendor for their AP processes. This can lead to delays in the processing of invoices and payments, as well as misunderstandings and errors. Look for an outsourcer who wants to develop a long-term partnership with your organization.
Reduced Turnaround Time
If you are seeking a payable solution that doesn’t interrupt service, AP automation software will ensure vendors always get paid on time, without exposing your financial data to another company. A company that outsources its accounts payable may grow dependent on a third-party firm. This dependence is risky, especially if the outsourcing partner suddenly faces bankruptcy or security breaches. When considering outsourcing, develop a list of potential accounts payable outsourcing companies to evaluate for cost, capabilities, security, data privacy, customer service, and business strength.
Cons of accounts payable outsourcing
This way, companies gain huge cost reductions from saved time and improved productivity. If you truly just don’t want the headache of accounts payable and you’re willing to accept some of the limitations listed above, then outsourcing may be a good fit for you. If you would like to explore further how Near can help you outsource your accounts payable roles to professionals in LatAm, book a free consultation call today. According to research, the global accounts payable automation market is set to reach USD 1,567 million by 2025.
Costly Payment Processing
The debit could also be to an asset account if the item purchased was a capitalizable asset. When the bill is paid, the accountant debits accounts payable to decrease the liability balance. The offsetting credit is made to the cash account, which also decreases the cash balance. Discover how tools like MakersHub are revolutionizing workflows, from dramatic time savings that transform weeks into minutes, to unparalleled accuracy that turns the tide on manual errors.
What does the accounts payable process involve?
Even small businesses must rely on vendors in numerous locations to deliver their products and services to customers. When complications occur in your accounts payable processes, they can hamper your business growth. AP outsourcing usually involves several changes to your accounts payable processes. It’s essential to prepare your in-house employees before outsourcing your accounts payable tasks. 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.