Topics: Accounts Payable Optimisation, Finance and Accounting Outsourcing Services

Getting the Most Out of Accounts Payable Outsourcing Services

Posted on May 31, 2024
Written By QX Global Group

A Guide to Overcoming Challenges in Credit Control

Outsourced accounts payable services can help your company benefit from strategic efficiencies in its accounts payable process. Between 2023 and 2028, the finance and accounting outsourcing market is expected to grow by US$ 27.3 billion globally. This figure clearly shows that companies are harnessing the potential of outsourcing to manage their F&A processes, including accounts payable optimally.

Accounts payable outsourcing focuses on making sustainable improvements to the accounts payable framework and reducing operational costs. While labour arbitrage is a big benefit of outsourcing, companies also benefit from scalability, led by a team of talented accounting professionals who can seamlessly integrate with the internal team.

The problem with accounts payable is that if you cannot optimise this process, your business won’t be able to make vendor payments on time. This will result in a loss of trust, which leads to reputational damage and poor supplier relationships. The latter can have a long-term detrimental impact on your business.

Ensuring that you have an outsourced accounts payable team that stays on top of your business’s financial obligations is a big plus. It helps pay your vendors on time without conflict. But the question is, how do you maximise the potential of outsourcing for your accounts payable process, which benefits your company over the long term?

Optimising Outsourced Accounts Payable Services Deliverables

Many factors come into play when considering outsourcing and making the most of this move. Here are some of the key factors that you must consider:

Proven Track Record of the Provider

  • There is a problem of plenty when it comes to outsourcing providers. There are plenty of accounts payable outsourcing companies, so it will be worth your while to evaluate the experience and expertise level of the company you are planning to work with.
  • Think strategically, and not just from the cost-benefit perspective.
  • The right firm will have the capacity to deliver more value in terms of driving digital finance transformation and being able to build a robust accounts payable framework backed by a standardised process that ensures quality, speed, and consistency across the accounts payable cycle.
  • It is important to undertake a thorough cost-to-benefit analysis of your outsourcing move to ensure you choose the right provider who offers a bouquet of accounts payable services that fit your budget.

An Eye on the Cash Flow Always

  • The question you must ask yourself is – How is this association with the outsourced accounts payable services provider going to help improve your cash flow?
  • While accounts receivable have a direct impact on your business’s cash flow, efficient accounts payable can support cash flow as well.
  • Many vendors can offer favourable payment terms in the form of product discounts if you consistently make payments on time and are seen as a trustworthy customer.
  • Making payments on time is also a sign of a business with sound financial health, and vendors/suppliers are willing to offer terms not offered to risky customers. This impacts cash flows positively.
  • Late payments might incur a heavy penalty, or you may already be paying heavy interest on the money owed.
  • In both cases, making timely payments can help you save money, impacting the cash favourably.
  • On-time payments driven by outsourcing can optimise spending, helping you save money and thus adding to your cash flow.
  • Also, it helps you build a reputable profile, wherein the supplier’s credit control team sees you as a non-risky customer.
  • In times of financial stress, this can benefit you in the form of longer-term supplier credit.

Harnessing the Power of Cutting-edge Technology

  • An accounts payable outsourcing provider should be able to support your finance transformation objective with a state-of-the-art accounting tech stack.
  • Efficiency in accounts payable can only be driven by speeding up the process, making it more accurate and data-oriented. This can only happen if you are able to leverage the right technologies that are customised to address your business needs.
  • For instance, RPA can automate time-consuming tasks such as data entry, and data analytics and reporting can deliver insights by evaluating accounts payable data to help you plug weaknesses and improve the process.

Decrease Financial Risk

  • Accounts payable outsourcing is not only about scalability or technology upgrades but also about complying with demanding industry regulations.
  • A traditional accounts payable framework might not be aligned with the strong governance framework that is the need of the hour.
  • Having worked with diverse companies with different governance needs, accounts payable outsourcing companies will be able to establish protocols and execute operational models that will help you comply with different industry regulations.
  • Outsourcing ensures the third party can be tasked with staying on top of all compliance requirements, while your internal team can ensure that the regulations are being met and can flag any gaps.

Maximise Internal Resource Potential

  • When you work with an outsourced accounts payable services company, your internal team has more time to take care of strategic accounting work, such as forecasting, planning and management, and more.
  • This helps maximise the potential of your internal staff, thus ensuring that your investment in the workforce is delivering value.

To Conclude

Your ability to get the most out of outsourcing firms depends on the key metrics you use to evaluate their performance. While timely payment is an ideal metric, so is the state of the vendor-business relationship and whether you are able to get necessary discounts and good payment options. More importantly, whether it’s maintenance of supplier ledger and records, supplier statement reconciliation, or any other accounts payable activity, the velocity and accuracy should have shown the necessary improvement.

QX is a leading account payable outsourcing firm whose core focus is on making accounts payable more efficient with high processing accuracy and low operational costs. It is founded on process excellence, standardised accounts payable practices, and maximising the potential of advanced accounting technologies.

FAQs

How much does accounts payable outsourcing cost?

The cost of accounts payable outsourcing differs from one company to another and depends on the scope and scale of work. It is imperative that you are able to do your due diligence when it comes to costing. But don’t decide to work or not with a firm purely based on its pricing. Make sure your outsourcing partner has the capabilities to deliver value over the long run.

What are the common challenges businesses face without outsourced accounts payable services?

Without the efficiency brought by outsourced accounts payable services, businesses often struggle with delayed payment processes, increased error rates in invoicing, and inadequate cash flow management. These challenges can lead to strained supplier relationships, decreased credibility, and potential financial penalties. Additionally, without outsourcing, companies may lack the technological advancement needed to streamline and secure their accounts payable processes, which can lead to inefficiencies and increased susceptibility to fraud.

How do accounts payable outsourcing handle data security and privacy?

Data security and privacy are paramount in accounts payable outsourcing. Providers employ robust security measures, including encrypted data transmission, secure data storage, and strict access controls to protect sensitive financial information. They adhere to international standards and compliance requirements such as GDPR. Furthermore, outsourcing firms conduct regular security audits and maintain transparency with clients about their data handling and privacy practices, ensuring that all financial transactions and records are handled with the utmost integrity and confidentiality.

Originally published May 31, 2024 09:05:34, updated May 31 2024

Topics: Accounts Payable Optimisation, Finance and Accounting Outsourcing Services


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