If you’re fed up with your current system, a provider can even help you onboard a new one.Easy integration helps you get started quickly so you can see value immediately. Furthermore, onboarding new technology, although necessary, comes with a hefty price tag. With over 18 years of experience in the industry, ILM ensures high-quality AP outsourcing services, with expertise in all major payments and ERP systems. 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. If you’re outsourcing accounts payable data, you need to share your confidential financial data with the third-party provider. As most outsourcing providers charge per invoice, duplication errors can be quite costly.

The Pros of Outsourcing Accounts Payable

They are equipped with the most advanced resources and technology for handling accounts payables efficiently. Lack of control over in-house accounts payable processes can lead to repeated mistakes such as duplicate payments, missed payments, scrupulous reporting, and more. Vendor relations should be taken as a customer service approach, because vendors can (and will) pull contracts from your company if they find it difficult to work with your business. From missed due dates or non-payments, vendors will be in touch with the AP department to track down the status of their payment which again, takes away valuable time from accounts payable.

• Outsourced firms for accounts payable have automated tracking features that allow partner businesses to monitor every step of the accounting process as needed.
• They help you maintain good relationships with your vendors, which reduces the burden on your in-house staff and keeps your operations running smoothly.
• Before embarking on an AP outsourcing project, establish clear goals and key performance indicators (KPIs) to measure success.
• You might not even be able to quickly identify the source of problems in the AP processes.
• Before choosing a third-party service, it is crucial to consider the potential disadvantages carefully.
• Outsourcing companies may not always be transparent in how they deal with your AP processes.
• The use of AP experts and sophisticated technology helps them identify risks and reduce the incidence of fraud.

Risk of Losing Control

Additionally, consider the provider’s experience in managing the specific type of AP processes you require, such as invoice processing or payment processing. There are many providers of outsourced accounts payable out there, and they might look like they are offering the same thing at first glance on their services and benefits. However, some practices can be followed to ensure that businesses partner with the proper https://www.bookstime.com/ provider. Data security and compliance should be top priorities when outsourcing accounts payable functions.

How Accounts Payable Automation Benefits Your Business

• Adopting an AP automation software can get you better control of invoice data capture, security, and help in better data analysis to increase business efficiency.
• With Airbase, it’s easy and cost-effective to cut out the middleman and take advantage of AP automation in house.
• One area that is often overlooked but holds immense potential for improvement is accounts payable (AP) management.
• With the right outsourcing provider and approach, businesses can streamline their Accounts Payable processes, reduce costs, and focus on their core competencies, ultimately driving growth and success.
• 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.
• Over the past few years, companies have made the switch to outsourced accounting to either A.
• Effective communication and customer support are crucial for a smooth partnership.

For many companies, the number of invoices and bills they deal with puts a lot of avoidable pressure on accounting teams. Now, depending on how efficient that service is and how many hours you need from them, they still might be more cost effective than automating your own AP processes and maintaining a lean AP team. Additionally, missed or late payments cost your staff time when they have to right the wrong by recovering erroneous spend, which in turn, reduces time available for other AP functions. Perform a thorough cost-benefit analysis to determine whether outsourcing accounts payable makes financial sense for your organization. Time zone differences, language barriers, and miscommunication can potentially impact the efficiency and accuracy of your accounts payable operations.

The advantages and disadvantages of outsourcing accounts payable

When you hire new employees, you don’t just hire anyone — you consider their skillsets to determine if they’d be a good fit for your company. Most businesses still use outdated and expensive systems like optical character recognition (OCR), or even paper invoicing, to manage their AP processes. Ensure that the provider adheres to the relevant industry standards and regulatory requirements.

• While these data storage approaches increase the accessibility of the data to the concerned parties, they make pertinent and confidential information more prone to security breaches and unauthorized access.
• Working with an external team may lead to communication challenges, especially if they are located in different time zones or have cultural differences.
• They have a lot of AP experience, and they dedicate every resource to that one job.
• Improving quality and automation, cutting costs, gaining access to a more stable pool of qualified talent, and freeing up internal teams for higher-value activities are common drivers.
• Accounts payable outsourcing and accounts payable SSC are usually seen as similar options offering almost identical models to businesses, but there are also some notable differences to clarify here.

• Plus, outsourcing providers often use comprehensive accounts payable automation software that offers built-in risk management tools for further protection from fines and legal issues.
• While outsourcing accounts payable responsibilities may take a burden off your shoulders it is also bound to create dependency on your provider.
• Although some of the differences related to these costs are based on the organizations’ industries, organizations that had adopted accounts payable automation tended to see reduced costs.
• Errors – While an outsourced vendor should have better controls and, theoretically, make fewer errors than an overwhelmed AP department, errors will still happen.
• Using outsourcing firms for automated AP tasks may increase the profitability of your business and lower costs.

According to the Accounts Payable Report by Levvel, 33% of companies are still manually processing invoices. Traditionally, an accounting professional manually reviews and verifies invoices, sorts them into batches, enters payment information, and issues payments to vendors. Manually processing accounts payable in-house can lead up to costs accounts payable outsourcing in the form of duplicate payments, late fees on payments, extra costs for hiring and managing an accounts payable team, and other ancillary costs. When you outsource invoice processing, your paper and digital invoices go to your AP outsourcing partner. They verify invoice authenticity and accuracy and upload them to an accounting system.

When you outsource, you eliminate the need to hire and train in-house staff to handle these tasks, reducing labor costs, employee benefits, and overhead expenses. This provider, often referred to as a Business Process Outsourcing (BPO) firm, handles various AP functions, including invoice processing, vendor payments, expense management, and reconciliation. And even if you know you want to use an accounts payable outsourcing service, automation software can be great to employ alongside your contracted provider. Most providers will either implement their own smart technology if you don’t have one in place already.

Data privacy and security are critical concerns when outsourcing accounts payable processes. 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. 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.

Seamlessly hire global talent and teams via our vetted freelancers, traditional outsourcing, and direct placement–all while staying 100% compliant. Book a 30-min live demo to see how Nanonets can help your team implement end-to-end AP automation. When outsourcing, especially to a third party, any questions must wait for an answer from another business entity. Outsourcing AP companies have employees that are cross-trained under high standards to cover when absences happen.