Outsourcing Accounts Payable: The Pros and Cons

Essentially, AP process outsourcing transfers tasks and responsibilities to another company for efficient management. AP automation uses business intelligence software to manage your in-house systems (with lower total costs on your part). Before outsourcing AP, review your provider’s privacy policy and data security measures to ensure they meet your standards.

• Invensis’ auditing and taxation services assisted us in effecting significant changes in the business’s focus and nature.
• Outsourcing may help your company cut costs and improve services, but over-dependence on third-party providers introduces more risk.
• AP providers are fully equipped with the skills, tools, and technology to not only manage existing accounts payable functions, but integrate new capabilities, for a more streamlined environment.
• Most businesses still use outdated and expensive systems like optical character recognition (OCR), or even paper invoicing, to manage their AP processes.
• As mentioned, many different AP solutions exist that either addresses a specific pain point or can execute a broad range of AP-related tasks.
• 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.

Outsourcing accounts payable processes can lead to significant improvements in efficiency for businesses. By leveraging the expertise and technology of a third-party provider, organizations can streamline their AP workflows and reduce the time spent on manual tasks such as data entry and invoice processing. Businesses usually assign these tasks to an outsourcing accounts payable team to achieve the utmost accuracy of the invoices and the delivery of payments, leading to smooth and steady interactions with the suppliers and vendors.

What Are the Main Services of an Outsourced Accounts Payable Provider?

Numbers like that mean real savings not only by right-timing major expenses and taking advantage of early-payment bonuses, but also in bread-and-butter savings on back-office staffing, equipment, and overtime expenses. Most importantly, it frees up talented, creative staff to focus on improving your core revenue-driving operations. If you’re looking for an experienced AP Processing company to handle your financial process now or heading into 2024, you’re in the right place. Finally, AP outsourcing may also cause disruptions to your AP department’s workflow, as AP outsourcers will likely need access to your AP system and data. For these reasons, it is important to weigh the pros and cons of AP outsourcing before making a decision. As a result, outsourcing accounts payable can be a highly effective way of improving business performance.

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. Moreover, invoice processing speed is limited by sales tax calculator your staff’s abilities and work hours. Third-party accounts management companies have modern facilities and software to efficiently and accurately accomplish tasks. Accounts Payable outsourcing is the decision to hire a third party with the specific expertise and technology to take over the AP processes, such as receiving vendor invoices, tracking business debts, and making payments on time.

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On one hand, SMEs often consider AP outsourcing to overcome business peaks & troughs and add scalability to their accounting functions. On the other hand, startups usually consider AP outsourcing to eliminate costs involved in hiring AP professionals. The QX accounts payable team works with industry-standard software to streamline finance and accounting.

Saves money and time

There is always someone from team Papaya who is available to help with your outsource accounts payable. Despite offering a wide suite of services, the cost savings for using Paymo for accounts payable (and a number of other things) could be remarkable. Our experts analyze the invoices and vendor statements in scope to identify and validate any cost recovery opportunities, identify the root causes of discrepancies and help you reconcile and make financial recoveries. GEP delivers an action plan that optimizes your contracts and payment terms, improves your procure-to-pay process, increases compliance and prevents future leakage. Before implementing a move to outsourcing or automation, get your data in order to ensure you begin your new program with a clean slate. Take time to check and cleanse data for errors, duplicates, or issues that could hinder transparency in your AP processes.

Top 3 Accounts Payable Outsourcing Companies in 2023

The differences between these options are essential to note in this article to help businesses pick the right partner for them and their growth goals. In the following, we will discuss the pros and cons of outsourcing accounts payable services compared to having an in-house accounts payable team, AP automation, and the shared services center. GEP provides end-to-end outsourced services for both procure-to-pay and source-to-pay services, both including comprehensive accounts payable functionality. The company offers staff with expertise in all major payments and ERP systems, including its own cloud-based, mobile-enabled source-to-pay platform. Accounts payable outsourcing services can provide businesses with additional AP support, including AP process analysis and design, Ap automation, AP data entry and processing, invoicing, and payment processing. There’s little doubt that accounts payable outsourcing and automation improve your organization through higher cost savings, better pricing, increased profitability, greater efficiency, and better data insights and tools.

What is Accounts Payable Outsourcing?

One of the key benefits of outsourcing some of your accounts payable functions is to reduce the workload of your internal AP team. This will allow them to focus on high-level AP functions with more value-creating potential for your organization, such as budgeting, analysis, strategic decision-making, and vendor relationship management. For many firms, the AP personnel tasks are not always as integrated into the business as another function such as operations, so it can be an attractive offering to outsource some of the paperwork. Of course, there are some downsides to using third-party accounts payable outsourcing services. 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. Outsourcing your accounts payable function resolves these challenges and more, with Deloitte reporting that 65% of successful organizations include outsourcers in their delivery model.

Best for (Mostly) Free Outsourcing Accounts Payable

Also, some organizations may prefer to retain direct (manual) control over their accounts payable operations. One of the biggest benefits of outsourcing accounts payable processes is the potential for significant cost savings. The improved efficiency mentioned in the previous point will lead to savings in several areas, such as reduced invoice processing costs and increased vendor discounts. Beanworks provides automation processes for your AP processes that allow your accounting service team to collaborate and be far more cost-effective. They claim to reduce 83% of manual data entry, cut invoice processing costs by 86%, and strengthen your entire accounts payable processes using AI. Genpact provides a comprehensive range of AP outsourcing services, including invoice receipt and processing, vendor management, and payment processing.

Offshore accounts payable functions can ‘ease the load’ for in-house or onshore accounts payable teams. This can help extract value from your accounts payable departments by employing solutions that generate improved back-office efficiencies. When a business decides to outsource its AP, a third party manages the AP department. Third-party accounts payable outsourcing services will typically use their own AP automation software to achieve efficiency.

In-house employees are more accessible, so questions and issues may be directed to the concerned parties right away. Duplicates could result in double payments, increasing expenses, and decreasing profitability and cash, adversely impacting cash flow management. This is like having extra sets of eyes on all of your vendor invoices before payments go out. If your AP department is spending more than expected on payment processing, it’s time to look under the hood. CFOs typically don’t invest in AP outsourcing because they think it will be costly.

If you have recurring purchases or need payments to go out on a certain date, the system can be set up to accommodate you. AP software is typically priced by either a subscription as SaaS or a fixed price for a license fee. Either way, you can also eliminate the need to add more to your payroll and employee processing costs. Late payments and lack of communication mean your account payable needs an overhaul. Melio only offers solutions for your AP department, unlike many others on this list who try to do it all. The difference is that Melio is affordable because they only focus on outsourcing AP.