When it comes to outsourcing your AP, all you need is the right provider for you to take full advantage of what this outsourcing service has to offer.
As your business grows, managing a good relationship with your vendors and suppliers is critical to your success. It is most likely that you have already added more vendors and suppliers all throughout this journey. As your business expands, so as different challenges that may arise in all aspects. A lot of companies often have troubles managing their accounts payable process. This is why entrepreneurs who are looking to streamline their overall finance and accounting departments opt to outsource their accounts payable.
Accounts payable outsourcing definition
Accounts Payable (AP) refers to a liability account wherein you keep track of the money your businesses owe to a third party. This is where you keep a list of your liabilities for purchasing goods or services. Basically, it refers to the short-term debts that your business has to be paid.
Accounts payable outsourcing means that you are hiring a third party to handle all your accounts payable processes. In choosing a vendor, remember that your outsourcing provider must possess all the needed resources, skills, and expertise to handle your organization’s existing APs.
Pros of accounts payable outsourcing
Outsourcing your accounts payable has a lot of advantages to your organization and these include the following:
Accountability
Once you outsource your accounts payable, it means that this part of your accounting will be attended to properly by expert hands. In some firms, in-house employees may tend to wear too many hats and this usually results in mismanagement and complications that may lead to major problems in the future.
Administrative support
Outsourcing your AP also means that you have extra staff. Your remote staff will perform specific functions that are needed in managing this part of your accounting. Some outsourcing providers also include reporting and other administrative services in their accounts payable services.
Access to advanced technological tools
Outsourcing providers are always equipped with the latest technology and other resources for their offered services. Aside from saving on costs, another main advantage of the outsourcing practice generally is having access to advanced technology.
Cons of accounts payable outsourcing
Of course, outsourcing has its own disadvantages. As a business owner, you also have to take note of the following cons in outsourcing your accounts payable:
Loss of control
Just like any other forms of outsourcing, you will have lesser control over your outsourced task and this also applies to your AP. Another thing is that, it is likely that outsourcing providers have their own way of doing things so you have to be open to the possibility that they won’t be abiding by your own workflow.
Possible errors
Although outsourcing providers have well skilled staff, the reality is that your AP processes are still susceptible to errors. The best way to reduce the risks of possible errors is to determine whether your outsourcing provider is utilizing a complete AP automation system or are they manually doing all processes.
Dependence
While outsourcing your accounts payable helps you to fulfill this specific function effectively, it also makes you rely on your outsourcing provider. Once your provider experiences problems and issues that impact your outsourced task, it will also affect your productivity, and most importantly in getting your vendors paid on time.
Remember that outsourcing may not be for everyone. When it comes to outsourcing your AP, all you need is the right provider for you to take full advantage of what this outsourcing service has to offer.
