If your AP department is spending more than expected on payment processing, it’s time to look under the hood. CFOs typically don’t invest in AP outsourcing because they think it will be costly. A paper-based accounts payable process makes it nearly impossible to improve visibility, and thus, long-term strategies.

• Accounts payable outsourcing is the practice of hiring a third party to handle your organization’s AP processes.
• Accounts payable outsourcing refers to assigning the management of the company’s payables to a third-party service provider.
• While there is some overlap, AP outsourcing is different from AP automation.
• Outsourcing your AP process is cheaper than traditional solutions—hands-down—because you’ll be able to avoid the overhead expenses that come with accounts payable.
• ARDEM developers customize automation for each client to meet their exact needs.

During this time the company was transformed from a small startup to a high-performance company with highly automated processes and systems. Haroon worked on numerous business process reengineering projects with great success achieving significant savings both in the accounting / finance, and operations. As someone who has had a front-row seat to his work, he is very professional in his interactions and is always a phone call away.. 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.

Vendor Master Maintenance

Increased resources – Outsourced AP solutions are generally going to come equipped with technology (i.e. AP Automation platforms) to handle their workflows. This means that they’ll have systems in place to handle both a PO-backed or non-PO process, discrepancy resolution, vendor management and sometimes administrative support. While mistakes are inevitable with any manual process, duplicate payments cost businesses money; a lot of money in fact. By using Klippa SpendControl, you can save time processing invoices, reduce errors and increase efficiency. It also prevents fraud by detecting duplicate invoices and cross-checking IBAN numbers on invoices with existing databases. Klippa SpendControl uses advanced OCR technology to automatically extract and process key information from invoices, eliminating manual data entry, and speeding up the overall turnaround time.

Furthermore, onboarding new technology, although necessary, comes with a hefty price tag. According to one study, 78% of best-in-class businesses had 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. An accounts payable company like AvidXchange can possibly speed up payment processing with automation too. AvidXchange’s network of more than 825,000 suppliers have their payment preferences already included in the automation, which can eliminate the time spent manually figuring out each supplier’s payment preferences. If a supplier a company is using is not already a part of AvidXchange’s supplier network, AvidXchange can enroll them at no extra effort to the supplier.

Resources and automation

Accounts payable invoices could travel through the accounts payable workflow and be ready for payment faster with the use of invoice processing solutions that make use of OCR software. One other advantage that some accounts payable service providers can offer is access to an established network of suppliers. AvidXchange has connections to over 825,000 different suppliers whose payment preferences come pre-integrated into the AvidXchange accounts payable platform.

Accounts payable is a type of liability account, which means that it has to have a credit balance to use. When properly recorded, the total balance of the credit has to be equal to the total of the outstanding vendor invoices that your company has received. The balance of accounts payable has to be equal to the total of the unpaid vendor invoices.

Additional Accounts Payable Outsourcing Services

Outsourcing can help avoid these overheads and still turn out to be budget-friendly as you pay the provider on a per invoice basis. GEP provides end-to-end outsourced services for both procure-to-pay and source-to-pay services, both including comprehensive accounts payable functionality. The company offers staff with expertise in all major payments and ERP systems, including its own cloud-based, mobile-enabled source-to-pay platform.

Accounts payable outsourcing is the business practice of using a third-party vendor to administer invoice or bill related processes. The list of services varies but the vendor will generally perform functions such as invoice capture, purchase order (PO) matching, and processing, payments, archiving records, and reporting. If there are limited resources within your accounts payable (AP) department, it’s key to identify how the function can scale to better process invoices when volume increases. This is in addition to all of the other financial tasks you need to take on to keep the business growing. As a business owner or a financial manager, it’s crucial to find the best way to manage your accounts payable processes.

Poor Vendor Management

How a payable outsourcing service communicates is typically on their terms. Although live customer support is ideal, it may not always be in the price range. Staff can also be located overseas and in a completely different time zone; which puts a strain on communication. AP automation software reports any exceptions immediately, as they happen in real-time.

All vendors and AP employees must be on board with submission systems to avoid problems. While an outsourced company ideally will make fewer errors than your own AP team, humans are not infallible, and mistakes happen. Companies working with outsourced AP service providers can face challenges with validating issues or errors in an outsourced firm.

Cloud Based Accounts Payable Solutions

Through its augmentation or outsourcing teams, EA provides the expertise needed to maintain this delicate balance. Integration with enterprise-wide financial and legacy mm millions definition, examples, what mm means systems for a streamlined approach. When you outsource, you don’t have as much visibility over the process, nor do you have as much control over how the process works.

When a company takes its AP department from in-house to outsourced, there is the possibility that entries will be duplicated. Before any changes take place, it would be wise to hold an internal meeting with staff to discuss the outsource partner, how this will affect workflow, and what employees can do to ensure a seamless transition. By outsourcing AP, a company is giving up control over their entire AP process. Gone is the ability to ‘pop in’ to check on the AP department and see how bookkeeping is going. Other firms also offer outsourcing accounts payable and accounts receivable services. The proliferation of BPO services has made outsourcing accounts payable to India and other countries a standard business practice.

Outsourcing accounts payable can also lead to improved efficiency in the processing of invoices and payments. Outsourcing accounts payable means your accounting department will have fewer tasks to accomplish since activities such as managing short-term debts are conducted by qualified third-party AP teams. Your in-house finance department can then focus on higher-level tasks and handle essential business operations.