Accounts Payable Outsourcing: The Complete Guide

There is no hard and fast answer to the question of outsourcing, as the individual needs of your business, your AP volume, and the structure of your current processes will help determine the best course of action. When it comes to outsourced AP services, error reporting can be problematic. Working with an external team may lead to communication challenges, especially if they are located in different time zones or have cultural differences. How a payable outsourcing service communicates is typically on their terms. Although live customer support is ideal, it may not always be in the price range.

  1. Set up a free consultation with one of our Payment Solutions experts today.
  2. 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.
  3. You should learn if they have lost any major client in the last three years and the reason behind it.
  4. Benchmarking your AP organization to your peers can help you identify the greatest opportunities for improvement and ROI.
  5. We also deliver best-in-class analytics tools that enable agile decision-making with real-time visibility into critical areas such as cash flow management.

Selecting the right accounts payable service provider is critical to ensure a successful partnership. Below are our top tips for three areas to consider when choosing the best AP outsourcing provider. By outsourcing the tasks above, your organization can focus on more strategic activities and let the outsourcing provider handle the time-consuming and tedious aspects of AP functions. Outsourcing payment processing tasks to a reliable provider also reduces the risk of payment fraud and errors, as they employ advanced technologies and processes to identify, eliminate, and minimize such risks. This can ultimately save your organization time and money while maintaining a high level of accuracy and compliance.

Providers offer services such as receiving hard copy and electronic invoices, matching invoices with purchase orders, processing debit memos, and image and data capture. To acquire the resources necessary to streamline their internal processes, small and medium-sized businesses often turn to accounts payable outsourcing companies to fill the gap. Accounts payable outsourcing is the practice of using an external, third-party service to carry out administrative tasks related to invoices and bills. The exact duties that accounts payable outsourcing services perform vary, but most commonly relate to invoice capturing, purchase order matching, archiving payment records and payment processing. Many companies are considering outsourcing accounts payable to specialized, external bodies.

If possible, learn more about the people who will be working for your business and ask them if they will notify you about any change in the team. Whether you own a restaurant, run a construction company or sell home decor, when hiring a third party to manage the AP you and your team are free to do some higher-level tasks. Vendors give you invoices, someone uploads invoices to your accounting software, you or your staff pay them, and that’s that. When you keep the AP in-house, you get to keep the workflow you have in place and avoid mistakes. As a business owner, you always want to stay on top of everything and make sure that the money going out of your business is really the right amount. Keeping all AP in-house means you have more control over every payment and can be more aware of what amounts are going out at all times.

Similarly, you need to make sure that you pick the best outsourcing provider. By selecting a reliable provider and implementing additional security measures, businesses can reduce the likelihood of data breaches and financial losses. In many cases, outsourcing is the easiest way to eliminate paper invoices, checks, and receipts.

When assessing the cost and value of outsourcing AP services, it’s important to consider not only the upfront costs but also the long-term benefits. By establishing clear expectations and maintaining a strong working relationship with the outsourcing provider, businesses can maintain appropriate control over their accounts payable processes. ultimate guide to saas revenue recognition in 2023 Besides an innovation agenda, your outsourcer should also demonstrate deep finance subject matter expertise and a robust approach to process documentation. 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.

This can include tasks such as reviewing and verifying invoices, processing payments, reconciling vendor statements, and resolving discrepancies. As the demand for accounts payable outsourcing services continues to grow, so does the number of providers, making narrowing down your choices challenging. To help you start your search, we’ve listed our recommendations for the top three companies offering accounts payable outsourcing. Each of these companies offers a unique set of services and solutions to help streamline your accounts payable processes and improve overall efficiency.

We tailor our nearshore accounts payable outsourcing services to match your unique business requirements and industry demands. We take a business-led approach to technology innovation, strategically layering intelligent AP automation, machine learning, intelligent data capture, and more to support your business goals. We also deliver best-in-class analytics tools that enable agile decision-making with real-time visibility into critical areas such as cash flow management. While cost is an important factor, it should not be the only consideration.

While this does take some of the supervisory duties off your hands, the lack of control can hinder communication, transparency and efficiency. It also ensures records are kept of all financial aspects of purchases made by the company. But adopting new technology presents an entirely new challenge in and of itself, especially for small and mid-sized businesses.

Lower errors and better fraud mitigation

Additionally, upgrading those old accounting systems to modern solutions such as Quickbooks can be costly and time-consuming. An increasing number of businesses are outsourcing their accounts payable processes to a specialized third-party team. An example of an accounts payable is when a company owes money to vendors for goods or services, such as transportation costs, raw materials, leasing fees, and software subscriptions. Accounts payable show the balance that has not been paid for transactions yet.

However, accounts payable automation may not be suitable for all businesses, as it may not offer the same level of human oversight and adaptability as outsourcing accounts payable processes. Additionally, implementing accounts payable automation software may require a significant initial investment (or recurring SaaS fees) in software and training of in-house employees. Also, some organizations may prefer to retain direct (manual) control over their accounts payable operations.

Loss of direct control

Outsourcing companies may not always be transparent in how they deal with your AP processes. Also, changes in your processes may not be fully implemented by outsourcing companies handling your AP processes, resulting in more errors or rework. Ensure that the provider adheres to the relevant industry standards and regulatory requirements. This is particularly important for financial services and businesses operating in highly regulated sectors. Reliance on an external company for crucial financial operations can be risky, especially if the provider faces downtime, service issues, or discontinues operations. By doing so, businesses leverage the expertise, advanced technological tools, and refined processes of these specialized firms.

Finance Benchmarks: Prophecy or Pretense?

When complications occur in your accounts payable processes, they can hamper your business growth. One of the best things about BILL is that you can choose our intelligent business payments platform as your AP automation solution whether you decide to automate your own processes or outsource them. So, to reduce costs, they find an AP supplier and hire those services out.

Leading IT Service Management tool used to manage vendor inquiries, with vendor contacts routed to a centralized mailbox, managed with automated workflow, status monitoring, alerts and escalations. helps high-performing clients in diverse industries increase the efficiency of their procurement process. Explore opportunities with innovative, VC-funded companies and build a fulfilling career as a skilled professional at the forefront of the industry. It memorizes even more than a human when it comes to features like tax compliance and global regulatory rules. Read our guide on everything you need to know about nearshore outsourcing. Below, we’ll explore these benefits and how they can directly impact your organization’s bottom line.

If you don’t have access to technologies that give you AP automation, workflows, and other time-saving tools, your outsourced provider can step in to deliver them at a fraction of the cost. If you’re still reliant upon cumbersome processes and old technology, outsourcing could help you see results faster and more clearly. Outsourcing is not merely the shifting manual tasks like data entry to an outsourced provider.

Tax accounting revolves around the tax income returns and required tax payments based on your industry and laws of the land. The service provider must keep track of all the tax payments you have made and keep updated with any change in the tax laws. There is a cost to outsourcing AP but it’s more expensive to hire and train new staff.

AP automation is possible when subscribing to a SaaS solution, adopting a dedicated accounting software, or adopting an ERP system on-premises. Accounts payable outsourcing is the process of hiring a specialised service provider who can take over multiple AP functions that businesses find difficult to handle in-house. 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. The efficacy of third-party service providers is difficult to gauge without implementing performance metrics and measurement tools. You may never know if they are billing for idle time, accessing non-work websites, accurately reporting issues, etc., if you don’t set expectations and check that they’re met. Essentially, AP process outsourcing transfers tasks and responsibilities to another company for efficient management.

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