In research conducted by the Aberdeen Group found that companies that leverage outsourcing & automation can process invoices/transactions as much as 59% faster than companies that don’t outsource. Using an outsourcing provider enables companies to do more, with fewer internal resources. Businesses are able to offload transactional functions and gain the ability to focus on core aspects of the business.
Accounts payable and receivable outsourcing can transform manual, paper-intensive functions into a fully automated process. An outsourcing provider will have the resources necessary to customize and streamline accounts payable and receivable processes. Automating processes and reducing administrative work allows staff and management to concentrate more on growing the business.
Many businesses are turning a cost burden into an advantage through outsourcing accounts payable and accounts receivable activities. By offering customized and competitive services, outsourcing AP and AR activities can be a smart choice for any business. The following are a few main benefits of outsourcing your business’ accounting functions.
Transformation and Innovation
Outsourcing of Procure-to-Pay and Order-to-Cash processes can help organizations to improve these further as they no longer have to get involved in the web of documentation, planning, execution and auditing from different departments. Better decision making can be enabled and more focus can be given to the core compatibilities of the business.
Economies of Scale
Standardizing the processes and hence bring about the cost efficiency can be easily managed by organized service providers especially in the scenarios such as SSC (shared Service Centres) etc. where sync and symmetry play very crucial roles. As a result, the output quality is improved while reducing the cycle time and costs involved.
Companies that have high employee turnover or those that have seasonal or cyclical spikes in invoice volume, understand that hiring and training employees is an expensive and time-consuming task. In addition, temporary employees may not always live up to expectations. Even companies that do not fall under these categories have limited capital, human, and technical resources that need to be allocated appropriately. Hiring in-house accounts payable or receivable staff, as well as all the equipment and programs that are necessary for the process, can be very costly. Outsourcing is an appealing option as it allows companies to maintain steady internal staff levels and utilize experienced professionals doing the same job at a lower cost.
In-house technology options, especially licensed software models, have an upfront investment along with ongoing maintenance expenses. In contrast, outsourcing providers usually charge per transaction based on transaction volume, which is payable over the period of the contract. This not only enables organizations to convert fixed costs into variable costs but also allows them to defer costs over a longer period of time, freeing up capital for other purposes.
Service providers incorporate cloud-based technology and product upgrades, they even slot in cross-functional and regular training for their employees in order to manage workload during peak times. This makes the entire process transparent and accessible to all the relevant users from different locations.
Organized outsourcing companies or service providers have their processes standardised and compliant according to Service Level Agreement (SLA). Their (Service Provider) sheer ability to design processes, deliver and control the output as per SLAs ensures that the desired objective is met with process optimization.
These are simply a few of the advantages of accounts payable and receivables outsourcing. Through outsourcing, companies improve compliance with internal controls and actually save money. A professional outsourced agency will have the resources necessary to streamline your accounts payable and receivables, leading to more efficient use of your resources towards other aspects of your business.
Considerations While Outsourcing
Outsourcing can bring a lot of benefit to the company, but in order to convert the enterprise’s finance department into a profit centre and to get the most out of outsourcing processes following points need to be considered before forming an alliance with any service provider.
- Selection of outsourcing partner plays a vital role. The partner chosen should have a scalable infrastructure, installed base with knowledgeable personnel to support the short, mid and long term requirement.
- State the objectives clearly to the service provider in order to get the best outcome of their services.
- Before selecting a service provider for it is advisable to check out their calibre in terms of expertise, latest technology and adaptability.
- Before going for outsourcing the company should streamline their business processes as it tends to reap more advantages of outsourcing services.
- Proper documentation should be done between the company and the service provider with transparency so that the focus is not deviated from the core purpose.
About Mynd Integrated Solutions
Mynd Integrated Solutions is a leading global service provider in business process and technology management, offering a broad spectrum of services in Finance and Accounting (FAO), Human Resource Outsourcing (HRO), Information Technology (IT) and Consulting. Our team of subject matter experts have the right blend of technology and effective business process experience to help you fully realize the benefits of process improvements. Mynd Integrated Solutions provides significant value beyond technology. We understand that BPM lies at the intersection between technology and process, and requires deeper business knowledge beyond system integration to succeed. We offer our platform as SaaS (Software as a Service) which complements the services delivered, to suit customers’ need across the globe.