Is Outsourcing Accounts Payable Worth It? A Quick Guide for Business Owners

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Is Outsourcing Accounts Payable Worth It? A Quick Guide for Business Owners

Accounts Payable Outsourcing Basics

Accounts payable (AP) is one of the most important functions for any business. As your business evolves, your network of vendors and suppliers will grow with it. Invoice processing, tracking your payments, and ensuring all the sensitive data is safely preserved can be a huge challenge to maintain in-house.


This is why some companies opt for accounts payable outsourcing services.


When people think of outsourcing, accounts payable is rarely the first thing that comes to mind. Most business managers associate outsourcing with back-office operations, IT, or customer support. But the payable process, too, can be outsourced with a firm’s management of its accounting system.


More and more businesses want to streamline their workflows, leverage stronger accounting services, avail better invoicing and document management, and strengthen their overall business processes. Remote-outsourcing has also grown as a trend in AP outsourcing.




How so?


Keep reading to find out!

Pros and Cons of Outsourcing Accounts Payable

What are the benefits of outsourcing accounts payable, and should you choose to outsource the function? Are there cost savings involved in managing your AP processes through an external vendor?


Check out this comprehensive list of both the pros and cons to get the complete picture:




Lower costs and increase profits. Through outsourcing, you can avoid overhead expenses such as hiring and training new staff. Processing costs also tend to build. These can be eliminated through AP outsourcing.

Risk of duplication. If your current employees are used to the in-house AP department and current payable solutions, they might take longer to orient themselves to working with a new service provider. This can lead to duplicate processes in data entry and bookkeeping.

Gain access to expert support and resources. Outsourcing to an AP provider means you no longer have to worry about AP automation and reporting tools on your own. AP outsourcing firms have these expert resources ready at hand for their clients, saving you time and worry.

Some loss of control. As with any process outsourcing, the moment you work with an accounts payable outsourcing company, you will have to relinquish some percentage of control to their methods and functions. The in-house payable department may no longer be as involved.  

Reduced errors and increased efficiency. Errors in AP systems are costly, especially for small businesses. Not only can they impact vendor relationships, but they can also lead to a compliance issue if you end up accidentally breaking business rules. You can avoid these by working with experts who know what to look out for.

Challenges with communication and time differences. Depending on the location of the AP outsource company, you may face issues with time zones and regular communication. This is a common challenge faced in the outsourcing industry.

Gain your time back and reprioritize value-add activities. Depending on the industry your business caters to, your core activities can differ. AP functions, at most, tend to be a secondary priority to any business. Through outsourced accounts for vendor management, you redirect time to what matters most for your business model.

Privacy concerns. When outsourcing, you hand over valuable data to an external agency. It’s recommended to do your research and make sure the provider you’re working with has strong and secure storage facilities. Also, have a look at their privacy policy to ensure you’re on the same page.




3 Key Tips for When You Outsource Your Accounts Payable

So you’ve decided to outsource your AP tasks! You’re one step closer to achieving greater efficiency through business process outsourcing (BPO).


But just how can you optimize your operations on your end to make sure you get the best out of it when you outsource accounts payable duties?


Follow these three tips:

1. Do a thorough review and background check of your outsourcing company.

The last thing you want is to partner your AP function with a company that isn’t qualified to handle your information. Ensure that their service levels and offering match precisely what you need. For example, if you’re keen on accounts payable automation, find a company that specializes in that and can effectively automate your AP function.


Pro-tip: Don’t be swayed by early payment discount offers and rush into any contracts with an outsourcing company. It’s always important to take your time and adopt a balanced approach to your decision-making.


2. Prep your in-house team for changes.

Remember, you can’t wipe your hands clean off responsibility the moment you outsource to an external provider. It’s your responsibility to also train your in-house team and all connected departments impacted by this change. Organizational change is important to navigate through, and a great way to keep morale high is by making sure it streams down from the top.


For example, you can have the CFO of the company set up talks with key departments and send out an organization-wide mailer of the structural change.


Pro-tip: Assign due dates for such change management tasks before the outsourcing services begin. Make sure all your key players are prepared well in advance. This will feed into a more manageable transition.


3. Utilize performance monitoring tools and/or software.

You have even more reason to track your KPIs and accounts payable performance the moment it’s been outsourced. The loss of control should incentivize you to take a closer look at how your payables continue to perform!


Depending on your business, the metrics may vary, but some common areas to track using performance monitoring tools include:

  • Are purchase orders being managed effectively?
  • Has the number of paper invoices being processed reduced due to automation?
  • Is the cash flow healthy and balanced in line with accounts receivables?
  • Are disbursements/payments to vendors on time?

Outsourcing Accounts Payable with STAFFVIRTUAL

Outsourcing your accounts payable can help boost the growth of your company and is an excellent option for businesses of any size. No matter what industry your business belongs to or how many employees you have, outsourcing accounts payable can help you get more out of your business!


When done right, it can give you several advantages over doing it in-house. With the right partner, outsourcing accounts payable can lead to significant improvements for your company's bottom line.


That’s where we come in.


Partner with STAFFVIRTUAL to get your free outsourcing plan and begin boosting those returns today!

Ike Stranathan

Ike Stranathan

Ike Stranathan founded STAFFVIRTUAL in 2009 after moving to the Philippines from California. Ike lives just a block from his offices in Makati, Philippines, and is passionate about helping companies achieve dynamic growth by outsourcing.

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