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How can you Leverage the Benefits of Outsourcing Accounts Payable for Businesses?
The business world is becoming more competitive with each passing day. To become a preferred business in your domain, you must offer exemplary services that satisfy your client’s needs while working on cost control at every step. Outsourcing accounts payable benefits are one of the best ways to work on your profitability and performance and become the industry leader.
Managing accounts payable is a cumbersome task that scales further as your business grows. You would also face the challenge of bringing new talent in-house if you decide to keep the accounts payable function in-house, making it a costly endeavor.
Here are a few facts about accounts payable that you must know:
- There has been a slow rate of digitization in the US B2B payments market, approximately $22 trillion, where studies reported that almost 36% of firms rely on paper invoices. On the other hand, 47% of companies use manual processes, the cheque payments make up to 49%.
- 44% of businesses are considering automating their processes to minimize cost, boost efficiency, curb fraud, and increase access to payment data.
- Large companies are already investing more in automation technology, which leaves small businesses, middle-market companies, cross-border businesses, and the gig economy the best target for innovative solutions.
According to a survey conducted by International Accounts Payable Professionals (IAPP), on average, firms pay $8 to process an invoice manually. The processing costs are $10-$20 per paper, fax, and email.
Key challenges faced by companies who are actively looking for Outsourcing Accounts Payable:
Overburdened with workload
AP departments are often overloaded with excess work. For businesses that are experiencing rapid growth, which influences the rate of invoicing, this is a common problem. While it means you are registering more sales and profits, that leads to an increase in workload, and your AP staff is struggling to make the pace. When you rely on manual jobs, like entering data, chasing approvals, and complicated PO-based processes, the efforts and resource requirement multiplies.
High cost of invoice processing
It is reported that manually reporting an invoice cost as much as $30. This cost can become even higher if you deal with poor workflow, vendors who deny cooperating, and rapid communication between different departments.
Leveraging accounts payable services appears as a great way to curb these rising costs of invoice processing.
The AP process is mismanaged
Errors are bound to happen in a process if you proceed manually. However, businesses lose the most when their duplicate payments are made. A report claims that “around 0.1% to 0.05% of total invoices processed are typically duplicate payments.” However, the numbers vary depending on the size of your business.
Compromised relationships with the vendors
Vendors are the most important pillar that supports your profitability, and it is important to take care of them. If a vendor decides to pull off the contract from you, your business will suffer big time. Vendors would contact your AP department for several reasons, including missed due dates or non-payments, tracking down their payments, and engaging your valuable resources for their efforts and time.
Stabilize Organizational Growth
Outsourcing Accounts Payable services is becoming a preferred choice of businesses across different verticals. While it implies that you would be using third-party professionals to handle your AP processes, a credible accounts payable service provider can offer you various benefits.
Their compatibility concerns make financial leaders skeptical of engaging with third parties for accounts payable services. However, Outsourcing Accounts Payable bring you great value and hence must be adequately evaluated to gain the best from the arrangements.
Why must every growing business outsource its accounts payable department?
Early payment discounts
The first benefit businesses reap from Outsourcing Accounts Payable services is that they can expedite vendor payments and invoicing, that eventually leads to enhanced effectiveness. The process can help resolve delayed payments and organize every process. Moreover, because you pay your invoices in full, you can ask vendors to offer you early payment discounts.
Manual intervention means errors that can be eliminated with automation. The best accounts payable service providers use the latest tech to minimize mistakes and make the best services available to you.
Take advantage of technology
Automating invoicing, payments, and expense management is the best way to take advantage of technology. Real-time data, reduced consumption of resources, and time-saving are some of the key benefits of using automation. Leading Outsourcing Accounts Payable companies use advanced tech to offer next-level services to their clients.
Reduce the burden by offloading noncritical AP functions
One of the most significant advantages of operating on outsourced accounts payable services is that you can reduce the burden on your employees by handing over some non-critical tasks to the accounts payable services providers. Outsourcing Accounts Payable can handle invoice receipts, document imaging, data extraction, content management, approval workflow, and reporting.
Quick turnaround, knowledge, and expertise
Outsourcing Accounts Payable services offer turnaround time and access to knowledge and expertise. The best accounts payable services providers follow industry best practices to be efficient in every task.
Administrative, tracking & reporting
Reporting comes as a part of the administrative function that the accounts payable service provider offers. You can get cost-per-invoice reporting, as well as timely reports maintaining cost-effectiveness.
Uptime and accountability
Managing your AP accounts payable services provider’s primary function; hence, they give it a lot of attention and effort. If the outsourcing services use automation tools, you can expect them to offer you excellent uptime and committed results.
Benefits of advanced resources
Accounts payable services bring significant efficiency to your all-over AP function. With modern automation tools, they can further improve the overall AP function. You also get the benefits of better resources which allow you to handle the increase in invoicing influx during peak season.
The Accounts payable processes significantly impact your revenue margins, client relationships, and quality standards. However, many companies are still struggling with manual data entry tasks that eventually act as a growth deterrent.
Smart and leading businesses outsource accounts payable functions to save time and money simultaneously, gradually allowing key people and all the resources to focus on core functions. This allows the company to access the latest technologies and functionalities without investing in infrastructure and process training.
Cogneesol, a leading accounts payable outsourcing service provider, has been in the business since 2008 and has served clients worldwide. The services here have helped clients optimize their business growth. Our experts have mastered the market standards and are trained with hands-on experience to cater to the regular back-office tasks supporting the organization’s overall growth.
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