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Boost Your Bottom Line by Outsourcing Accounts Payable
In any business sector today, the focus is always on optimizing profitability. This is because it aids business growth and the development of new products, creates brand awareness and helps diversification both into new sectors and in new product lines.
Since profit is the keyword, the single-minded pursuit of all businesses is to seek ways and means to boost the bottom line. Therefore the most important measure that is taken by companies at present is to initiate cost-cutting measures so that even if income is not increased in the short term the balance sheet is not adversely affected.
One of the major bookkeeping heads of a company that has a direct bearing on the bottom line is outsourcing accounts payable or invoice management relevantly when any payment is due from you for goods and services received by you.
This is a liability in your books of accounts. On or before the due date when the payment is made by you, it becomes an expenditure having a direct bearing on your profitability. Thus it is the focus of all industries to keep a tight rein over accounts payable and ensure its accuracy in every respect.
However, it is always beneficial to outsource accounts payable functions to boost profitability. A look at the advantages of doing so will bear this out:
Savings in investments
Keeping a track of every invoice is not easy especially for mid-sized and large companies where literally hundreds are generated and received every month. Processing them accurately means having to install advanced and high-end hardware and software and hiring trained and skilled personnel to run the systems.
This is a huge expenditure by itself. It can be argued of course that these will be clubbed into assets but when depreciation on these equipment starts off there will be a huge drain on expenditure not to speak of high salaries of the professionals.
By opting for accounts payable services at highly affordable rates, this investment is not required. It boosts profits which can be better utilized for competitively pricing products leading to further growth and income.
Re-allotment of manpower
Invoice Processing Service is a tedious and time-consuming task and requires a great deal of manpower to optimize its functioning. All invoices received must be scrupulously tracked throughout its life cycle to ensure that payments are made within due dates. Further, it must be ensured that invoices received are properly authenticated for payment by authorized personnel of the company.
The dimensions of this task can well be imagined. Simply by availing the external agencies for invoice processing service, all this trouble is eased off. Staff can be re-allotted to more productive activities and extra manpower need not be recruited when the volume of invoices to be processed increases with growth in business.
Plugging revenue leakage
Revenue leakage is a bane of all businesses and error-prone accounts payable processing can be one of its main sources. This is because invoices are sanctioned by different people and an in-house central disbursing authority can find it difficult to assess its authenticity because of the number of invoices involved.
But when you outsource accounts payable, the agencies have special tools and systems in place that ensures that all payments made are absolutely accurate and there is not even the slightest error in disbursements. By plugging the possibility of revenue leakage because of wrong payments, your profitability will get a boost.
Monitoring of expenditure
You will be given updated reports of this head of the account by accounts payable services and since all invoices are ultimately linked to a specific expenditure head in profit and loss statement, you can closely monitor the different spending limits. You can get customized reports from the outsourcing agencies with specific fields that you want to track closely.
Thus if you feel that you are spending more on a particular item than you should, you can curtail expenditure under that head. By closely monitoring your profit and loss you can cut wasteful expenses thereby boosting your bottom line.
Also Read: How Outsourcing Accounts Payable is a Necessity for a Business?
It is today generally acknowledged by all businesses that spinning off accounts payable functions to outsourcing agencies positively impact profitability. This is the primary reason why more and more sectors are taking up this option to maximize business efficiencies and increase profitability leading to all-round growth and development.
If you also want to increase your company’s profitability through outsourcing, contact Cogneesol now! We are one of the leading outsourcing companies providing the best accounts payable services at an affordable cost. Contact us now, at +1 646-688-2821.
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