Outsourcing Accounts Payable: The Pros and Cons

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. But it involves incurring other costs such as investing in the software and allocating time for training the employees to use the software. Look for a provider with extensive experience in accounts payable outsourcing services and a deep understanding of your specific industry’s nuances and best practices. An experienced provider will have a proven track record of successfully managing AP processes for businesses similar to yours, allowing them to anticipate potential challenges and provide tailored solutions. AP outsourcing involves delegating tasks like invoice processing and vendor management to an external provider, leading to cost savings, improved accuracy, and better compliance.

1. During the transition phase, the outsourcing provider will typically offer comprehensive training and support to ensure both the client’s staff and the outsourcing team are fully equipped to handle the new processes seamlessly.
2. One of the biggest benefits of outsourcing accounts payable processes is the potential for significant cost savings.
3. Of course, there are some downsides to using third-party accounts payable outsourcing services.
4. Ensure their technology aligns with your organization’s needs and can seamlessly integrate with your existing systems.

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Outsourcing accounts payable relies on a third party to manage this crucial accounting function. Hence, if your business shares duplicate invoices, you are going to have to pay for that too. If outsourcing providers do not have the facility to detect duplicate invoices, then the business ends up incurring more costs than necessary. Many accounts payable outsourcing companies work off-site but use modernized technology that can be tracked at every step.

Your vendor relationships are suffering

The accounts payable process consists of several key steps to ensure timely and accurate payments to vendors. Errors – While an outsourced vendor should have better controls and, theoretically, make fewer errors than an overwhelmed AP department, errors will still happen. And when it’s time for 1800accountant bbb reviews​ you to go back and audit the trail of documents, you may have limited access to be able to find where something went wrong. If this is the case, a small error can quickly turn into a huge hassle that goes unresolved for days or weeks. It would be wise to identify if the outsourced solution is leveraging complete AP Automation or manually keying in data for any step in the process. Administrative, tracking & reporting – Since you’ll be paying this vendor a fee to manage your AP, they’ll often provide reporting among other administrative functions.

Access to Expertise

Book a 30-min live demo to see how Nanonets can help your team implement end-to-end AP automation. As you outsource AP tasks that were previously carried out by the in-house team, your employees might have different responsibilities and day-to-day tasks. While you may not be able to access the exact data about their projects, case studies and accounts of the provider’s previous work give you an idea about their quality. Outsourcing accounts payable takes most of this workload off of your AP team supervisor.

With its extensive experience and a strong presence in the US, Accenture offers valuable support to businesses seeking to optimize their accounts payable processes. They provide a range of services, such as invoice receipt and processing, vendor management, and payment processing, ensuring timely and accurate payments for their clients. Accounts payable outsourcing services offer a powerful solution for businesses seeking to streamline operations, reduce costs, and enhance financial management efficiency. When considering accounts payable outsourcing, it’s essential to understand the services provided by accounts payable outsourcing companies. They offer a range of technology, personnel, and value-added consulting services to help manage your accounts payable processes more efficiently. Some of the most frequently outsourced processes include invoice receipt and processing, vendor management, and payment processing.

Skilled outsourcing providers can make a company’s AP processes more efficient; thus improving the cash flow. Businesses explore Accounts Payable Outsourcing to streamline operations, reduce costs, and improve efficiency. Pain points like manual data entry errors, delayed invoice processing, and high processing costs drive this search. To evaluate the success and return on investment (ROI) of accounts payable outsourcing, businesses should establish clear metrics and methods for assessing both financial and operational impacts. This may include measuring cost savings, process efficiency how to account for outstanding checks in a journal entry improvements, error reduction rates, and vendor satisfaction levels. Successful accounts payable outsourcing partnerships should be built on a foundation of continuous improvement and adaptation.

If you’re still reliant upon cumbersome processes and old technology, outsourcing could help you see results faster and more clearly. One of the most significant drawbacks of AP outsourcing is the reduced control over what is a contra asset account your financial processes. When you delegate AP tasks to an external provider, you’re no longer overseeing the daily operations directly. This can make it difficult to track progress, resolve issues quickly, or ensure that the provider is meeting your company’s accounts payable needs.

In these cases, there is sometimes a possibility that certain entries will be duplicated. Before outsourcing, it’s wise to educate your employees about the new process so they can work in tandem with your outsourced provider. But without the right efficiencies and reporting tools, the risk of payments fraud and vendor non-compliance escalates as businesses grow. In fact, according to the 2018 Payments Fraud and Control Survey by the Association for Financial Professionals (AFP), 78% of all organizations surveyed were hit by payments fraud in 2017. Among those that were hit by fraud, 92% said the attacks collectively cost at least 0.5% of their organization’s annual revenue. No matter your current accounting system, the best accounts payable outsourcing firms have the tools to integrate with it.