Accounts Payable Services – An Investment Worth Making?

“Well, I have a team of accounting experts looking after the finances, there is no need to rope in an external accounts payable services partner.”

“Our in-house administration department itself manages our vendor payments. We are not looking to invest upfront in accounting staff or outsource AP services.”

“Our vendors never complain about delays in the payments. They simply add up the outstanding and raise the invoices again.”

A strategic finance leader would never believe or stand something like this in their tenure.

Cash flow and vendor relationships both are of prime significance for a healthy business relationship. And a CFO who realizes this, never falters at making supplier payments on or before time.

You may start to think – “If so, then what calls the need for accounts payable services?”

Your business expansion and growth avenues hinge solely on the way you handle your cash flow, invoice management & vendor relationships.

An in-house team of AP experts handles the load, but may struggle to adapt with changing AP processes, evolving technological solutions, and changing vendor expectations.

Thus – accounts payable services.

Still uncertain?

Let’s unveil –

• When should you consider accounts payable outsourcing?
• The Advantages of Outsourcing Accounts Payable
• Impact KPIs to measure when outsourcing payables

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Let the exploration begin!

When Should You Consider Accounts Payable Outsourcing

Outsourcing accounts payable function is a crucial decision to make for any business leader, and it should be.

The decision outsource AP is not something you decide overnight.

There are signs you need to follow as a decision maker, before you decide whether to continue managing accounts payable in-house or extend your team by investing in accounts payable services.

You may start to think – “What are these signs and when is the right time to approach external help?”

Let us look at the scenarios indicative of the need to outsource accounts payable function.

Let’s figure out the answer for you.

Your AP team is overburdened with the workload

First, if your AP team is overwhelmed and burdened due to increasing workload, it’s a big positive.

You may wonder – “How does owing the payments to suppliers become a positive?”

Positive because, increase in supplies is a ripple effect of increase in the sales.

Leaving the positives aside, it’s commonly observed that the AP department often overworks to keep the supplier payments in time and maintain the vendor relationships.

And precisely, a decision to outsource AP can promise some relief.  

Still, if you don’t wish to take that route, the burden may result in some unforeseen circumstances.  

This burden often inclines during periods of rapid business expansion, where increased sales result in a flood of invoices. While the boost in revenue is fantastic, it inevitably burdens your accounts payable team.

This burden is particularly acute in environments relying on paper-based systems or manual data entry, where chasing approvals and managing heavy PO-based processes is mandatory.

Each additional invoice adds to the load, gradually derailing AP productivity. This results in unreasonable backlog, fading efficiency, and increasing risk of errors.

Outsourcing accounts payable services helps ease the burden on your AP team and streamline the function.

Thinking about – “How will outsourcing payables prove helpful?” 

Simple. Outsourcing accounts payable function will free your in-house team from redundant overheads.  

Your vendors will thank you for the timely release of payments, with improved workflows & processes that the outsourcing partner brings in.  

Your invoice processing costs are shooting through the roof!

Did you know?

The cost of processing a single invoice manually varies somewhere between $15 to $40.

Your inefficient and complex workflows should take the blame for this.  

Imagine the hamster-wheeling your in-house AP team must do to process one vendor payment.  

They will have to handle the paper trails manually.  

They will have to deal with vendors, who aren’t all cooperative.  

They will have to communicate the differences, back and forth! 

They will have to manually verify the invoices & seek departmental approvals.

And, at the end you will see the added-up costs for manual invoice processing.  

Realize, that won’t be the right time to regret not outsourcing payables in time!

As a decision maker you must prioritize exploring all options for reducing those costs for invoice processing, including outsourced accounts payable services.

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Your AP process lacks controls

Mistakes are bound to happen with manual invoice processing.

On average, approximately 0.1% to 0.05% of invoices paid are typically duplicate payments.

Duplicate payments are a serious concern and as a CTO, it’s of prime significance to you to get rid of these flaws in the payable accounts process.

This can even mean hundreds, thousands or even millions of dollars lost to duplicate payments, based on the size of the business. 

And yet, you are not accounting for the time and energy your AP staff spends to recover the lost payments. This in turn affects the overall AP function of your business.

An Accounts payable services provider ensures they utilize the right set of tools & procedures to facilitate tighter control on your AP processes.

Your vendor relationships are suffering like never before!

Vendor relationships are not different from customer relationships, when cashflow is in the game.

Imagine losing vendor contracts due to a poor payment reputation. Repeated delayed payments are indicative of a red flag for vendor relationships.

94% of businesses experience a negative impact due to late payments!

From missed due dates or non-payments, your vendors will follow up with the accounts payable department to track down the status of their payment which again eats into everyone’s valuable time from accounts payable.

No matter the circumstance, when a vendor payment is missed, it shows badly on your company’s reputation. Vendors might sometimes resend the same invoice and through multiple mediums to ensure they are paid, which as mentioned in the previous listed issue, can result in double-paying an invoice.

Instead, you can allocate your budgets on outsourced accounts payable services than hiring more AP staff.

This has a strategic advantage over adding more resources, which includes hiring, training and retaining them. It demands spending longer time & extensive cost and energy resources – which most of the CFOs don’t have.

You would prefer to outsource AP services than hiring AP staff!

Hiring AP professionals on your in-house team doesn’t come easy.  

Hiring is the hassle that leaders would prefer to stay away from.

Vetting for the right fit, conducting the one-on-one discussions, selecting the right candidate, and then hoping for the hire to stay with you forever. 

Isn’t that too much to ask for?

Why not simply outsource AP services from a reputed services provider? 

Going this route saves you from the hiring hassles & higher costs of recruitment too! 

Plus, you get access to vetted accounts payable processes, advanced accounting tools, and top accounts payable talent. 

So, when you hit rock bottom with the hiring hassles, outsourcing payables walks in as a savior. 

Now, as you know when to approach an accounts payable services company, let’s look at the brighter side of working with one.

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The Advantages of Outsourcing Accounts Payable

Cost Savings

When we say cost saving, let’s break down the how.

Assume you are maintaining an in-house team of accounts payable. We all know that a team comes with a hefty price tag!

You have got –

• Salaries to pay
• Benefits to offer
• Overheads like infrastructure & equipment costs

Let’s reverse the scenario – You decide to approach AP outsourcing companies and sign in for the best one to handle your AP function.

You get the leverage of

• Expertise
• Resources
• Scalability

An outsourced team of accounts payable experts brings experience, expertise, vetted processes, and infrastructural support in terms of tools & technology.

Which one weighs profitable?

An in-house team or accounts payable outsourcing? – you choose.

Enhanced Efficiency

Picture this for a moment – Your accounts payable function is operating as a well-oiled machine. Payments are in check and vendor relationships are healthy. That’s the beauty of outsourced accounts payable services.

When you partner with a seasoned outsourcing partner, you’re in for a seamless accounts payable function.

You may start to think – “WHY”

That’s because these accounts payable experts live and breathe AP processes day in and day out. They’ve seen it all, from paper jams to misplaced invoices, and they know exactly how to navigate the maze of accounts payable workflows with finesse.

But the real game-changer is – automation.

Outsourced accounts payable companies trust technology and prioritize investing in modern solutions to streamline AP for you.

Say goodbye to manual data entry and tedious paperwork. With automation on your side, invoices zip through the system at lightning speed, approvals are streamlined, and payments go out like clockwork.

And the best part? With fewer manual touchpoints, the risk of errors drops drastically.

Focus on Core Business Objectives

When your internal team is tied down with AP tasks, drowning in a sea of invoices and paperwork, you get worried.

Sounds familiar, right?

This is exactly where an outsourced accounts payable services provider pitches in as your savior.

By outsourcing accounts payable function to a reliable AP partner, you are freeing up your internal resources to focus on core business objectives.

Imagine the possibilities when your top resources aren’t burdened with a mountain of invoices, instead, they can focus their energy on strategic aspects of business like expanding into new markets or enhancing customer experiences.

And not to forget the fact that you must stay competitive & relevant in today’s fast-paced business landscape.

Why settle for something less when you can have it all?

Why not let your internal team focus on what truly matters for organizational growth?

Realize, outsourcing AP operations isn’t only about saving time, energy & costs, it’s about prioritizing the core business objectives.

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Access to Expertise

If you’ve been handling accounts payable in-house, you know that there’s too much to handle. Processing vendor payments is merely one of them. You must be compliant with the regulations & keep up with the changes, stay abreast of the latest technologies, and utilize the best practices.

Picture this – You’re navigating the intricacies of handling an accounts payable team on your own. Juggling with the ever-changing compliance practices, chasing the technological evolutions to make the best out of it.

It becomes too tedious & tiring right?

However, you can’t help it. Because you got to go through the daily grind anyway.

Reconsider the scenario with an accounts payable outsourcing services provider.

With a seasoned team of outsourced AP experts as an extension of your team, you have access to the top talent who “Know it all and have done it all”. Be it compliance hiccups or technological advancements, they are versed in handling it day-in-day-out.

By outsourcing the account payable function, you are signing in for top-tier technical help. It’s not only expertise that the outsourced AP provider brings up, they also future proof your AP function by following best practices.

Thinking “HOW?”

Professionals from the accounts payable companies actively seek the change. It’s something that they must do to be ahead of the competitive landscape. They are current with the trends in AP space, best practices & technological advancements.

Knowing all of this, would you still choose to stay behind with your AP team?

Via outsourcing accounts payable services from a reliable AP partner, you will have the confidence & resources to navigate the AP landscape swiftly.

Scale on Demand

Flexibility & scalability are the best perks to leverage via outsourcing accounts payable function.

Thinking “HOW?”

Assume this – Your sales are breaking records and you’re bulldozed with a heap of invoices. Or, you are experiencing a lean patch, with barely any invoices to process. Putting both the scenarios in perspective – would you be able to hire & fire your accounts payable staff with the changing business needs?

We know the answer is “NO”

However, that’s exactly the leverage you get via outsourcing accounts payable services to a reliable AP partner.

When you are at the peak of growth, you need that boost of scalability with additional support on AP processes. An outsourced accounts payable company empowers you with the ability to scale up the AP team size, infrastructure & resources. This helps you handle the flood of invoices without breaking a sweat about the increased workload.

In contrast, when you experience a lean patch and there are merely any invoices, your accounts payable partner scales the resources down to match your reduced needs. This ensures you don’t burn any extra costs and pay only for what you need.

That’s how scalability & flexibility act as game changers for you.

Now, as you are aware of the advantages of outsourcing payables, let’s understand the impact KPIs to track when working with accounts payable services providers. 

Impact KPIs to Track When Outsourcing Payables 

As you arrive at your decision to outsource AP services, it’s quintessential to understand the impact KPIs.

We are confident we have helped you draw a clear demarcation between handing payables in-house and outsourcing payables.

Now, let’s look at the impact KPIs that you must track while working with an accounts payable services provider.

Invoice Processing Efficiency

Outsourcing payables won’t make sense if you aren’t tracking invoice processing accuracy & speed.  

You must track these two parameters right from receipt to payment.

Improvements in processing speed and a declining number of errors are the indicators of positive impact KPIs.  

If you wish to analyze the impact better, compare the speed & accuracy measures with the records back in time, when you did it in-house. 

Cost Savings & Reductions

Cost-effectiveness is inevitably the non-negotiable measure to track as a positive impact KPI.  

When you outsource accounts payable services from a renowned partner, you must see a noticeable decline in operational costs & a rise in cost management.

To make it more tangible, you can compute the total cost savings achieved through outsourced AP services, you can compare in-house versus outsourced expenses. This shall gain you more clarity in terms of sheer numbers.

To track the direct & indirect impact KPIs, you must consider looking at reducing overheads, labor costs, and infrastructural costs. 

Healthier Supplier Relationships

Fostering healthy supplier relationships has a vital role to play in business expansion.  

Delayed supplier payments prove counterproductive & ruin supplier partnerships.

And this is what makes supplier relationships the most significant impact KPI to track when you outsource payables. 

Timely supplier payments & proactive communication are the indicators of positive impact KPIs.

To analyze it at a deeper level, you can track the supplier satisfaction scores by recording timely feedback. 

Now, as you are aware of the impact KPIs to track while outsourcing payables, you must be looking out for a reliable AP partner, right?

Your search ends here at Integrative Systems – Your trusted accounts payable services company.

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Integrative Systems – Your Accounts Payable Services Partner

In the broader landscape of financial operations, accounts payable service providers emerge as invaluable allies, quietly orchestrating the smooth functioning of financial processes.

Integrative Systems offers unparalleled accounts payable and receivable services, custom-tailored to your business needs. The accounts payable services portfolio includes but not limited to –

• Invoice processing and management
• Vendor management and communication
• Payment scheduling and execution
• Expense reporting and analysis
• Purchase order management
• Data entry and verification
• Reconciliation of accounts payable records
• Compliance and audit support
• Vendor payment dispute resolution
• Document management and storage

Our team of AP professionals ensures your bills are settled on time, your financial records are spot-on, and your business operations run like a well-oiled machine.

So, the next time you settle a bill or process an invoice, take a moment to appreciate the pivotal role that accounts payable services play in maintaining the smooth sailing of your business.

And if you’re looking for a reliable partner to manage your accounts payable and receivable, and become an extension of your in-house team, your search ends with Integrative Systems.

After all, a business without efficient accounts payable is akin to a ship without a compass – it will soon be adrift in the sea of financial chaos. With Integrative Systems at the wheel, you always steer toward financial success.

Drop us a line at [email protected], and let’s start the conversation.