Accounts Payable AP Outsourcing in 2024: Pros, Cons, and Evaluation

Vendors with different invoicing standards/procedures tend to make accounts payable processes quite cumbersome. Additionally, when you own your own AP process you can turn accounts payable into a strategic partner for your business. 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.

If outsourcing providers do not have the facility to detect duplicate invoices, then the business ends up incurring more costs than necessary. Apart from streamlining invoices, accounts payable outsourcing companies also reduce the incidence of errors in invoices. By running proper checks & validations, they can identify errors in invoices and prevent wrong payments.

Less process control

1. You may have hesitations about working with a third-party, or it may not be a reasonable choice in your industry.
2. Outsourcing accounts payable gives you access to a team of experts who specialize in financial processes.
3. While outsourcing your accounts payable may seem problem-free there are some issues that a business can still face with outsourcing.
4. Also, with AP processes being taken care of, your employees can focus on higher value tasks with increased efficiency leading to better productivity overall.
5. While outsourcing helps a company cut costs and improve its service levels, it can often limit their independence.

With a relentless focus on the customer, Corcentric works with businesses to improve cash flow and achieve the operational efficiency they’ve been searching for. As we mentioned earlier, verifying potential AP outsourcing providers’ security and compliance measures is crucial to ensure that your organization’s sensitive financial information is protected. Evaluate the provider’s internal controls, anti-fraud measures, and adherence to accounting principles and regulations to gauge their commitment to data security and compliance. By carefully considering the cost and value of different accounts payable service providers, you can make an informed decision that will deliver the best return on investment for your business. Accounts Payable Outsourcing involves handing over AP tasks to an external service provider. This approach offers comprehensive management of AP processes, from invoice processing to payment disbursement, leveraging the provider’s expertise, technology, and resources.

Tips For Choosing the Right Accounts Payable Outsourcing Partner

Invoice receipt and processing is a crucial aspect of accounts payable outsourcing services. Providers offer services such as receiving hard copy and electronic invoices, matching invoices with purchase orders, processing debit memos, and image and data capture. Accounts payable outsourcing is the practice of hiring a third party to handle your organization’s AP processes.

Company

This increased visibility can enable businesses to monitor their cash flow better, identify potential issues or opportunities, and make more informed decisions related to their financial operations. 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. 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.

This includes not just the direct costs saved but also the indirect benefits like increased efficiency, reduced errors, and better cash flow management. A provider offering services at a very low cost might not always deliver the quality or breadth of services needed. Outsourcing accounts payable tasks enables businesses to realign their focus towards the heart of their operations – key areas like product development, customer service, and strategic planning.

It’s not as if the vendor is a mix of roles from CFO and Controller, to AP Manager and AP Processor, which can happen at smaller firms—one person wearing many hats. Depending on where the vendor is located or if they have a distributed staff, you may find one with near-constant uptime when they are utilizing technology like AP Automation. Time Doctor is a powerful performance tracking software used codification of staff accounting bulletins by PWC and KPMG to track their outsourced teams’ work activity. Take the time and effort to communicate all changes to your employees — while this may take some time, it’s going to result in smoother processes, which will pay off in the long run. Outsourcing is likely to introduce modern AP software as well as collaboration tools to boost your efficiency.

Companies outsource their accounts payable operations in part to gain access to better tools and processes. Of course, this rapid change in processes can cause problems in-house, especially if your employees are used to your old procedures. Mid-sized businesses don’t often have the luxury of employing a robust team of security experts, nor do they have the resources to run extensive audits and eliminate risks. To get the security tools and skills they need, many small to medium-sized businesses rely on the outsourcing services of larger and more sophisticated AP experts. According to one study, 78% of best-in-class businesses had business broker state licensing requirements info adopted e-invoice processing technology compared to just 38% of their struggling competitors. The study also revealed that best-in-class AP departments who relied on procure-to-pay (P2P) automation derived the most strategic value.

Outsourcing vendor management tasks can ensure that vendor relationships are well-maintained. 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 taxes on 401k withdrawals and contributions faster and more clearly.