In today’s competitive business where information is required on your fingertips, Accounts Payable management is one of the most essential tasks for businesses. Lack of it will reflect poorly in vendor relationship, cash saving policies and working capital, eventually affecting the overall profit. The option of outsourcing accounts payable services can be favorable for your business in increasing the working capital.
The significance of outsourcing has been discussed and proved beneficial time and again. Firms from all industries and across the size spectrum. Many enterprises recognize the necessity for efficiency in work, lower operational costs, and control in time-responsive business processes. To achieve these objectives, firms have worked with outsourcing service providers to make profit, gain knowledge and innovate technology.
Though, a lot of firms have been hesitant to outsource some financial processes, such as accounts payable (AP). However a recent study has shown that best in class companies are four times more expected to outsource their whole AP operations. The research firm also found that 21% of all companies currently outsource a part of their accounting and finance process. Companies’ hesitation to outsource accounts payable is often based in unsupported fears and common misconception.
Common myths while Outsourcing Accounts Payable
Myth #1: We lose Control
Reality – Accounts payable outsourcing reallocates only the process of handling invoices to an outsourcer, not the approval. A mutual outsourcing relationship can truly enhance the control over the AP process because it needs standard rules and procedures around processing that might have only been inside the minds of the accounting staff. (Since they work with multiple firms and across industries)
Myth #2: Is not secure
Reality – Outsourcing improves the security of your invoice-related data. Because any data violation can put an outsourcing company out of business, so they make it a top priority to be safe, including their physical data center protection, application-level security and data transfer with controls that equal or exceed the protection of behind-the-firewall defenses.
Myth #3: Is not efficient
Reality – Research verify that AP outsourcing is the most efficient way of handling invoices. It is also observed that invoice processing takes as much as 59% faster than other in house accountant. The time difference also plays a vital role in making it much faster.
Myth #5: Outsourcing is useful only to reduce headcount
Reality – If reducing workforce is certainly a goal, AP outsourcing has been proven to achieve that objective with no loss in productivity or capability. Outsourcing goes beyond reducing headcount to include accessing and building potential, scalability and flexibility that support the company’s core business strategy.
Myth#6: We are too big/small
Reality – The technology of accounts payable outsourcing market has improved tremendously, bringing more capacity to handle organizations of all size. Both the business segment can choose to outsource and benefit. Like small companies can choose outsourcing to lower the cost to handle an in-house accounting staff and financial managers. While large companies can opt for outsourcing to support a specific line of business, or to clean up a problem area.
AP outsourcing moves only the processing of payables, and not the decision-making. So, you need to choose a service provider whose objectives align with your own and that gives valuable ways for you to execute the necessary support for management, review, and control of the AP process.
It is the time to choose AP outsourcing and place your company as a best in-class performer. Know the myths of AP outsourcing, but identify the facts, companies that partner outsourcing company get better with their AP processing, regulate policies around AP, and attain significant gains in efficiency and cost reduction.