The process of hiring a third party to manage your company’s accounts payable (AP) processes is known as accounts payable outsourcing. AP providers have the tools, skills, and technologies to handle your accounts payable functions and incorporate new functionalities for better results.
According to a survey, around 90% of US companies think of outsourcing as a vital factor in business growth. Simultaneously, 78% of the small business owners believe that they are competitive because of outsourcing. Outsourcing accounts payable is a tricky task that cannot be assigned to everyone. Some organizations’ financial data is so complicated that they hire a team from outside to manage it. Meanwhile, other organizations update their systems and implement the latest technologies to process in-house sourcing instead of assigning it to a third party to manage and control their financial data.
Outsourcing accounts payable has become very common in the contemporary world. Although there are many reasons to outsource your finances, some people still seem skeptical about it due to security concerns. Transferring payments to contractors and suppliers become challenging as business grows, and financial systems stretch across the world. Even if you are a small company, you are probably reliant on vendors from different locations to get your customers’ services or goods. However, if your organization has advanced reporting, payment methods, and tracking tools, the chances of fraud drop down to little to none.
According to the survey conducted by Associations of Financial Professions in 2018, around 78% of the organization experienced fraud in payments. However, 92% of the organizations claimed that the collective cost of those frauds had an impact of 0.5% on the organization’s annual revenue. The elimination of fraud is relatively harder for small businesses than big enterprises as they are unable to hire a team of cyber and security experts to keep track of payments.
Another important factor driving people towards account payable outsourcing is the reduced chances of error. Such errors can cost significant losses to businesses. Account payable outsourcing involves automated processes and highly-experienced professionals that minimize the chances of mistakes, which are commonly made by in-house accountants. Accounts payable outsourcing services have made it easy for companies to ensure security and have also reduced the risk of payment, frauds, and errors by removing the need for paper invoices, receipts, and checks – getting 70% of their services done through advanced computational tools and highly integrated security systems.
Account payable outsourcing has become a very significant source of managing accounts, helping businesses flourish within the minimum period. Accounts payable outsourcing has successfully convinced people to move towards advanced and better accounting methods because of its efficiency in handling and minimizing errors and payment frauds—better analytics and suggestions to improve the possible avenues—leading the organizations towards success.