Account Payable Outsourcing: Pros & Cons For Accounting Firms

These BPO providers have all the necessary tools and technology to execute all of your business’ accounts payable functions. Top-notch providers will not just take over these tasks, they will optimize them by introducing new capabilities and developing more efficient business processes to enable growth. Faced with an ever-increasing workload, more and more accounting firms are opting for an outsourcing solution for accounts payable and receivable. Outsourcing accounts payable and receivable means a company outsources its accounts payable function to a third-party service provider. Many vendors from across the globe offer Accounts Payable services, and businesses that utilize them can save time and money and take loads of stress off their employees. Finally, when handling their accounts payable operations, firms have several alternatives.

Businesses should remember that they lose privacy when they are divulging financial information and providing access to sensitive data while opting to outsource AP processes. Choosing a reputable third-party processor is an essential step in reaping the benefits of outsourcing your AP tasks. For instance, you can implement Stampli’s best-in-class AP Automation software and train your team within days. It would take you a week just to set up introductory calls with outsourced vendors.

Manual accounts payable processes have caused businesses challenges since long before remote working became the norm, prompting many organizations to embrace and invest in AP automation. Outsourcing AP forces many teams to forfeit the ability to optimize and strategize how and when they pay vendors in order to maximize cash flow. Meanwhile, using AP automation with or without a payment service provider keeps teams in the driver’s seat. Accounts payable automation also significantly reduces fraud-risk by providing both management and AP staff with heightened visibility into the flow of invoices and transactions across the organization. Accounts payable outsourcing is the business practice of partnering with a third-party AP outsourcing firm to fully offload the handling of your organization’s AP processes. These outsourcing firms are equipped with the tools, skills, and technology necessary to manage your existing accounts payable functions.

Why accounts payable outsourcing is gaining popularity

When businesses grow at a very rapid pace, there tends to be a sharp increase in the volume of invoices and bills. A consequence of this is that the accounts payable team cannot keep up with their increased workload. Accounts payable automation gives organizations more command over their monetary cycles and information. Automation lets you keep your data in-house, unlike outsourcing, where a third party handles your accounts payable.

If the primary goal is to take the workload completely off of your hands and lose oversight of your payables, then outsourcing may be the way to go. If you would rather streamline your in-house AP department and retain control while maximizing efficiencies, you will want to automate AP. Understaffing AP teams increases the likelihood of fraud, especially in regards to ACH payments. When it comes to ACH payments, it’s not only a hassle for your team to collect and update vendor bank account information, but this process also exposes your business to greater fraud risk. As a result, AP teams must proactively protect their businesses and minimize ACH payment fraud.

The benefits of outsourcing accounts payable

However, payment services from MineralTree can offload this challenge entirely. MineralTree provides ongoing vendor support, fielding payment inquiries and providing prompt, professional service to suppliers. By combining these two services, AP teams can better manage the relationships with their vendors without any additional time commitment. CFOshare uses our professionally trained team of Mexican bookkeepers to reduce fraud risk, reduce error frequency, save cost, and empower you to focus on your core business.

If you are ready to explore accounts payable outsourcing for your business, contact us now for a free consultation. Sometimes the costs of hiring and training new accounts payable staff exceeds the cost of outsourcing the tasks they would be performing. Hiring new recruits can also be a hassle in terms of time and office reorganization.

• Implementing automation software may be a cost-effective and reliable way to solve workflow issues within your AP function.
• As a result, the company can redirect the saved resources toward other critical areas of the business, ultimately contributing to improved cash flow and overall financial health.
• By combining these two services, AP teams can better manage the relationships with their vendors without any additional time commitment.
• In an earlier blog post, we explained that manually processing a single invoice can cost as much as $30.
• 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.

To address this concern, it is essential to communicate clearly with the potential outsourcing provider. Emphasize the importance of open communication and transparency throughout the partnership. Seeking a provider that prioritizes regular updates, and real-time reporting, and maintains clear lines of communication can help mitigate the apprehensions surrounding the loss of control in the outsourced AP process. One primary concern with outsourcing accounts payable is the need to share sensitive historical data and in-house documents with the external provider. This aspect may raise privacy and security apprehensions for some companies. While outsourcing accounts payable offers numerous benefits, there are also valid reasons why some companies may choose to avoid this option.

One strategy that has gained popularity in recent years is accounts payable outsourcing. 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. This frees your in-house AP department to focus on higher-level tasks and attend to the core business processes that enhance your company’s performance and improve service levels. These concerns can make it very appealing to outsource some (or all) of the accounts payable function, which ironically, becomes another invoice. There is never enough time in the day but utilizing a payable outsourcing service that has access to the latest technology and time-saving tools puts some time back on the clock.

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

By partnering with professional outsourced companies, businesses can benefit from the integration of advanced technologies, systems, and processes. These solutions are designed to identify, eliminate, and mitigate errors before they escalate into problems, ensuring a seamless and error-free accounts payable process. Accounts payable refers to the money a company owes to its suppliers or vendors for goods and services received but not yet paid for. These transactions involve the processing of invoices, recording expenses, and ensuring timely and accurate payments to vendors.

Loss of control – It goes without saying that anytime something is happening outside your building, you’ll have less control, and outsourced AP vendors are no exception. Additionally, it’s unlikely that they’ll be able to conform to your AP workflows exactly, so you’ll be doing things their way. Also, don’t be disconcerted when outsourcing AP and they have eyes into your financials; a loss of privacy is one drawback and vulnerability when it comes to accounts payable internal controls. According to Ardent Partners’ Accounts Payable Metrics that Matter in 2020, the top challenges holding AP back are exceptions, lengthy invoice approval times, and too much paper.

Challenges of Talent Acquisition & How Outsourcing Is Helping CFOs to Solve Them

There are ten different accounts payable outsourcing companies listed in my review above, and each specializes in different functionality. As I outlined at the beginning of my review, I personally use Bill.com and it is my favorite from my experience. Stampli aims to make your B2B payments a breeze, facilitating your payments directly through your bank via ACH. They want to make your accounts payable processes fast and simple, saving you a headache on payments. There is always someone from team Papaya who is available to help with your outsource accounts payable. Papaya Global is another option if you need someone to handle your company’s accounts payable functions.

With a platform like MineralTree, invoice capture is combined with human review for 99.5% accuracy. Another important benefit of outsourcing is access to the latest tools and technologies to optimize AP processes. 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. Pilot is built with remote teams in mind, saving you time by managing your payroll, benefits, and compliance all in one platform.

Missing out on the opportunity to outsource AP can lead to several issues, including increased costs, inefficient cash flow and workflows, strained vendor relationships, and reliance on outdated technology and tools. When opting for outsourced accounts payable services, businesses benefit from the wealth of resources and automation tools readily available at the disposal of service providers. These comprehensive solutions encompass software, document management, and robust reporting tools.

It’s essential to prepare your in-house employees before outsourcing your accounts payable tasks. Let IQ BackOffice take that stack of paper invoices off your desk and ready them for digital approval and electronic payment. With our cloud-based software, we’ll have them back in less than a day, for less than half the costs you’re used to. Veritree is a data-driven, restorative platform that connects nature-based solutions with mission-driven companies ready to lead the restorative economy. With on-the-ground monitoring and blockchain verification, Veritree provides transparency and trust through data and tools that revitalize ecosystems, strengthen communities, and build climate solutions.

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. Similarly, Sacrificing Ratio Meaning, Example, Formula, etc you need to make sure that you pick the best outsourcing provider. To outsource your accounts payable easily, here’re a few things to keep in mind.

Unlike outsourcing AP services, there is no need to get a workforce up to speed, nor move data to a 3rd party accounts payable vendor. Hiring an accounts payable outsourcing firm will ensure timely results regardless of how complex the cash flow and invoice management are for any given account. Automating accounts payable leads to streamlined, accurate processing and enhanced control with real-time monitoring. Automated accounts payable solutions like MineralTree also integrate seamlessly with major accounting systems and ERPs, ensuring that you can access your data anytime, anywhere. As with many things, the advantages of outsourcing accounts payable come with a few downsides as well.

Remote offers AP outsourcing, along with the ability to outsource your entire HR department. Book a 30-min live demo to see how Nanonets can help your team implement end-to-end AP automation. When faced with inefficiencies in your Accounts Payable operations, you may wonder whether to opt for automation or outsourcing and what sets these approaches apart. Paying your first bill takes anywhere from a few minutes to a few days, depending on the size of your AP department and processes. Companies that are worried about headcount expansion are often struggling with an equivalent increase in paperwork. The implementation alone would be a nightmare, not to mention extremely costly.

According to the 2021 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. 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.

The company’s processes are fully Sarbanes-Oxley compliant and compatible with all major accounting and ERP systems. If you’re facing any of the above issues, it’s time to look into Accounts Payable outsourcing companies. Outsourcing is one option for business owners who want a third party to handle the entire process rather than taking the resources and time to overhaul the department in-house. For most companies, the benefits of Accounts Payable outsourcing are more than worth the cost. The Account Payable platform is configured to manage exception workflow and assure that your vendors get paid on time. Currently, proxy payments account for roughly 30% of our customers’ virtual card spend, so it’s a huge value-add in terms of maximizing your spend without any additional effort.