It’s all done with a touch of humor to keep things light-hearted and entertaining. With a global presence and a reputation for excellence, Genpact has become a go-to choice for companies looking to streamline their accounts payable operations. Their cutting-edge technology and data-driven approach enable them to process invoices at lightning speed, leaving their clients amazed and amused. But before we dive into the laughter-inducing world of accounts payable outsourcing, let’s take a moment to understand the importance of this industry. Accounts payable is a critical function for businesses, ensuring that bills are paid accurately and on time.
- Moreover, invoice processing speed is limited by your staff’s abilities and work hours.
- The study also revealed that best-in-class AP departments who relied on procure-to-pay (P2P) automation derived the most strategic value.
- With the right tool, you can get most of the same benefits as you would by outsourcing AP—with the added bonus that you can keep the process under your control.
- This could increase your data’s accessibility — making it prone to unauthorized access.
- Although this can free up valuable time and resources for businesses to focus on other core activities, it may also lead to a lack of oversight and increased dependency on the outsourcing provider.
Cost reduction
It’s also worthwhile to take note of their office/staff locations as outsourced AP services can be hosted overseas, which can be a communication barrier. These concerns can make it very appealing to outsource some (or all) of the accounts payable function, which ironically, becomes another invoice. When upper management is looking at these costs from a high level, they will likely be interested in exploring all options for reducing those costs for invoice processing, including outsourcing. It’s not at all uncommon for AP departments to become completely overwhelmed by their workload.
Accounts payable outsourcing: Pros, cons & alternatives
They might be located far away and the lack of transparency in processes can become a serious issue. AP automation software reports any exceptions immediately, as they happen in real-time. The system can also be set up to route specific issues to certain parties, which helps to resolve problems even faster. They may be doing a company’s bookkeeping from another country like India.
Also, changes in your processes may not be fully implemented by outsourcing companies handling your AP processes, resulting in more errors or rework. AP processes, if interrupted due to employee absence, can multiply and burden the business. Outsourcing providers have an adequate workforce (and backup teams) to step in and manage your AP processes. Organizations dealing with sensitive financial data may be hesitant to use a third-party vendor for their AP processes. 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. Other firms also offer outsourcing accounts payable and accounts receivable services.
Finance automation that puts you in charge
AP outsourcing companies don’t just follow best practices when doing their work. They incorporate technologies that identify errors before they become liabilities. However, those businesses which can incorporate automation, e-invoicing, and other efficiency tools will gain an edge over their competitors. They’ll even negate many of the problems that have plagued AP departments for decades. As you’re not physically present where the tasks are performed, it can be difficult to manage any issues that pop-up. You might not even be able to quickly identify the source of problems in the AP processes.
When a business decides to outsource its AP, a third party manages the AP department. Third-party accounts payable outsourcing services will typically use their own installment sales accounting method AP automation software to achieve efficiency. 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. Vendor management services are essential for cultivating positive partnerships and optimizing supplier communication. 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.
Access to better tools
AP automation (discussed later in this article) may provide the efficiency and visibility of outsourcing while allowing your company to maintain control of its processes. In many cases, outsourcing is the easiest way to eliminate paper invoices, checks, and receipts. Paper processing has long been one of the most significant sources of problems for accounts payable professionals, especially in terms of fraud. As the business world expands and supply chains stretch farther and farther across the globe, payments to vendors and other service contractors are becoming even more complicated. Even small businesses must rely on vendors in numerous locations to deliver their products and services to customers.
