If your business is planning to have an outsourcing accounts payable, then you are not alone. According to the latest survey, 45% of companies are outsourcing their AP processing, and 35% are planning to have it outsource in the incoming year. Also, according to the report, outsourced F&A will continue to expand and become a standard practice for many businesses.
That kind of report is not a surprise anymore to many financial professionals. When accounts payable outsourcing is done appropriately, the ROI (return of investment) will encourage higher efficiency and re-engineered process. It can also reduce business’ expenses and promote lesser time in managing the process.
Some companies have a successful account payable outsourcing that can process bills and invoices up to 60% faster than companies who don’t outsource. However, the pitfall is that a weakly managed transition to an outsourced accounts payable department can lead to chaos, higher expenses, and weak relationship with the vendors.
Below are the common mistakes that a company makes when hiring an account payable outsourcing.
Making a Decision Based On The Price
Before signing a contract, make sure you’re fully aware of the details and the services you will get for the investment. Figure out if a low price service will reflect on outdated technology or an incomplete AP back-office solution, or if the one who will do the services is a pool of untrained personnel.
For instance, some companies will offer a business a simple software package, which includes basic reporting and OCR (Optical Character Recognition) technology that can capture information through invoice images and leave other processing decisions to the staff. Automation without re-engineering strategies and processes, while cheaper, can speed up the wrong method. Besides, technology alone needs more work and expenses to establish new software to support your business’ financial system.
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Not Understanding the Services That You Will Need
Ensure that you will only outsource a complete type of process. An excellent scope of service will make sure that you do not invest in a partial solution that takes additional time to complete.
For instance, you may notice that the invoice scanning process and data entry with the software for routing method is sufficient. But it requires your team’s effort throughout the entire process. An AP staff needs a disproportionate amount of their working hours to deal with the alternation and changes in the vendor support. Many businesses see that added benefits from a complete outsourced AP management solution includes a vendor setup, automated routing for approval, and vendor payments as well.
Once the advantages of AP outsourcing are visible, most businesses complement it with an AP outsourcing solution, which can range from cash application, customer billing, cash application exceptions such as credit card expiration, dispute management to the customer with late-payment reminders. Another thing to weigh is the level of reports your business will need and how will you access them.
The most exceptional solutions provide real-time reporting with in-depth data available from any web-enabled gadgets and devices. This process will enable several levels of management to access the data they need to create a business decision immediately. Also, an integrated end-to-end AP methodology should be customized depending on your business needs, and according to the company rules.