A poorly performing accounts payable (AP) process can hurt your bottom line. Businesses are trying to streamline their finance operations by embracing paperless invoicing and restructuring their internal processes to compete in a globalized business environment.
Outsourcing the accounts payable function can provide a competitive edge to businesses in the long run. Especially small and medium-sized businesses can delegate highly specialised accounts payable functions to external consultants and free up internal resources, which can be re-invested to improve core competitiveness.
Many small and medium-sized organisations still rely on paper invoices. For them, training existing employees on new AP processes and adopting AP automation tools, poses serious investment questions.
Accounts payable outsourcing can be beneficial to small and medium-sized organisations lacking the investment, time, and automation software to improve their existing AP process.
What are the accounts payable process?
When your company buys items on credit from a supplier or vendor, the outstanding amount gets reflected as accounts payable. It is listed as a liability and needs to be paid quickly to avoid default.
A typical AP process governs the coding, approval, payment, and settlement of vendor invoices. It has strict internal controls that prohibit the payment of incorrect invoices received from vendors.
Accounts payable is an important part of a business that needs to run smoothly and make sure vendors and suppliers get paid on time.
Although AP outsourcing offers considerable benefits, the major problem is whether organisations can entrust their most valuable internal financial data to a third-party service provider. Before you consider AP outsourcing for your firm, check out these 5 benefits:
- Increased Efficiency: The best accounts payable service providers implement world-class processes that allow businesses to pay vendor invoices on time, avail early payment discounts, and forge better relationships with vendors and suppliers.
- Cost Effective: Outsourcing the accounts payable function helps businesses save on costs stemming from manual data entry, invoice matching, physical storage, and postage of invoices. Outsourced AP service providers use automation software to reduce the resources required to complete the aforementioned tasks.
- Avoid Double Payments: Invoices are processed according to the agreed-upon business rules. Accounts payable management firms use automation software to make the entire process highly reliable. This reduces the scope of human error and the requirement for additional oversight in the process. In this manner, any duplicate invoices are flagged, and there is no scope for double payment.
- Getting Top Talent: A growing company needs to spend considerably to find and onboard talent for the AP department. They can cut hiring costs by partnering with accounts payable service providers and utilizing the services of experienced professionals without incurring the usual labour costs. Reducing labour costs – salary, benefits, and equipment – is the main reason companies outsource.
- Focus on Core Function: Outsourcing non-core functions let your company focus on core tasks. Your existing AP employees can focus on vendor relationship management, budgeting, analysis, and decision-making.
A robust and organised AP process can help your business pay vendors efficiently, cost-effectively, and accurately, thus lowering the cost of operations. As a business grows, leveraging world-class automation tools becomes pivotal for gaining an edge over competitors.
MYND offers accounts payable management services and embraces digital invoicing and accounts payable automation, which allow better information flow and verification. For the last two decades, we have developed solutions that add value, enable smooth transactions, identify bottlenecks, and prevent downtime for a diverse clientele.
Read also: Mynd’s Finance and Accounts Shared Service Center