The Cost-Effective Guide to Accounts Payable Outsourcing

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Companies struggling with a growing pile of unprocessed invoices might want to consider outsourcing their accounts payable (AP) processes to save time and resources. This takes the burden of paperwork off your AP team. It also frees up time for them to focus on higher-level finance tasks that drive business growth.

According to Deloitte’s latest study on outsourcing trends, 70% of companies turn to outsourcing because it’s more cost effective than maintaining an in-house team. With the right third-party provider, the efficiency of an accounts payable outsource team will be high, but the expenses will be kept low.

This article discusses what an accounts payable team does, when it’s ideal to outsource, and the pros and cons of moving this department to a third-party partner.

What is Accounts Payable Outsourcing?

Accounts payable outsourcing is the practice of hiring another company to handle invoicing and bill-related processes. The list of services depend on the provider, but an accounts payable outsource team can generally perform the following:

  • Issuing and matching purchase orders
  • Managing payments and receivables
  • Capturing invoices
  • Archiving records
  • Resolving invoice and payment discrepancies
  • Reporting

There are many reasons why a company would want to outsource its AP processes. We talk about some of the most common ones below.

When Is It Ideal to Outsource Invoicing?

As your company grows and the paperwork grows, considering accounts payable outsourcing will begin to make sense. Here are some scenarios that show when it might be best to outsource.

  • If your team is struggling under their current workload — like manually entering data, managing purchase orders, recording disbursements, etc. — you might want to look into outsourcing. This will take the stress off of your team and enable them to focus on the high-level aspects of finance.
  • If you’re using an outdated accounts payable system or paper-based invoicing process, you’re likely losing money. As clients become more technologically inclined, preference is given to providers that can manage finance tasks quickly and easily. Accounts payable outsourcing can connect you with a technically advanced accounting unit.
  • If you’re too swamped to conduct training on accounting processes, outsourcing is the way to go. An outsourced team doesn’t need to be trained or provided with the tools to complete the work. It will already have all the necessary programs and knowledge.

Accounts Payable Outsourcing Pros & Cons

To decide if outsourcing is the right decision for your accounts payable tasks, consider the following pros and cons.

Accounts Payable Outsourcing Pros

  • Improved efficiency: By outsourcing to a dedicated accounts payable unit, you can send invoices and update records fast. And an in-house team can dedicate their attention to high-priority tasks. Third-party providers are also typically equipped with the latest software and accounting systems to reduce duplications and errors.
  • Lower cost: The cost benefits of outsourcing have a lot to do with your overhead expenses. By moving your invoicing tasks to a third-party provider, you no longer need to pay for training, insurance, and office resources. Because you’re already hiring a skilled and well-equipped team, you only have to pay for their services.
  • Continuous coverage: When an employee is absent, their responsibilities are usually delegated to their coworkers or supervisor. With an accounts payable BPO, you never have to worry. An outsourced team can perform the same task, leaving no room for delays and downtime.

Accounts Payable Outsourcing Cons

  • Indirect control: An outsourced team could be hundreds of miles away from your business. It can be difficult to know what’s happening during work hours. You have to trust that the team you hired is getting the work done efficiently.
  • Dependency on another team: Becoming dependent on an outsourced accounts payable team can be stressful if the company gets into any trouble, like a security breach. When choosing a third-party provider to partner with, ask about its security protocols and contingency plans.
  • Lack of privacy: Sharing financial data with an outsourced provider could be risky. Thoroughly research their privacy policy to make sure that it matches your company’s standards.

Deciding if you should go for accounts payable outsourcing depends on your company’s present and future needs. The disadvantages mentioned can certainly be avoided if you partner with a reputable outsourcing company whose values are aligned with yours.

Choosing the Right Service Provider

Here are some tips on choosing the third-party provider that will handle your accounts.

Meticulously review their security and privacy policies.

A beneficial working relationship starts with ensuring your values and practices — especially in terms of security and privacy — align with yours.

Evaluate their work portfolio.

You want the best quality of work. Looking at a provider’s previous projects is how you’ll know if they’re at par with your company’s standards.

Review feedback from current and past clients.

These clients were once in your position. Knowing their positive and negative feedback is the perfect way to determine if the provider you’re eyeing is the right fit.

Find a Reputable and Reliable Outsourcing Partner

C9 Staff connects companies with skilled talent from 35 countries. We can find reliable and experienced talent from various industries, accounts payable included. Whether you need one accounting staff or an entire professional unit, our end-to-end managed services guarantee only the best at a cost-efficient price. Companies that have partnered with C9 Staff reported cost savings of as much as 70%. We can do the same for you.

Get in touch with us or fill out the form below for your staffing and recruitment needs.


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