Accounts Payable Outsourcing Services

Account payable is basically the money that a business or a company owes to its suppliers that features as a liability in the balance sheet of the company. It is a type of credit that the supplier offers the company against goods or services that have already been sent to the company and received by it.

There are two types of payables – one is the Trade Payable which is payable against purchase of physical goods that enter the inventory and the other is the Expense payable which is payable for purchase of goods and services that are expensed like advertising, travel, office supplies, utility bills etc. Businesses need to maintain a log of this liability account and generally use accounting softwareto keep a track of invoices that are pending payments and invoices that are paid. 

Why is it important to manage Accounts Payable optimally?

·         The first reason is that it helps set a strong long-term relationship with suppliers.

·         Optimizes working capital

·         Enables an organisation to develop cash saving initiatives and sustain it.

·         Helps the organisation comply with regulatory policies

·         Overall, helps the organisation maximize profits and work in a congenial atmosphere

In view of the above benefits, there is trend with more and more organizations going in for outsourcing their Accounts Payable system where the outside agency helps the organisation streamline their finances and accounting processes to achieve set business goals in the most efficient manner. 

Why outsource Accounts Payable?

All business entities that consider Account Payable Outsourcing to a third party vendor should first weigh the advantages and disadvantages of doing so.

Advantages of outsourcing Accounts Payable:

a.    The first and the most important reason to consider this option is the level of efficiency that comes with an experienced and well-trained outsourced agency. The agency has not only got the knowledge and required information of the industry; it will also have access to the latest technology and processes in the field. The work will not only get done accurately, it will also get done fast because that is the core service area of the agency.

b.    Evenwith off-site Accounts Payable system of the outsourced agency, the business will be able to track in real-time the accounts payable information. Hence even when no permanent employee of the business is involved in operating the system, the business owner is always informed of the current status of Accounts Payable of his business.

c.    Another important pro of hiring an outsourced agency or Accounts Payable expert is the reduced costs in doing so. While maintaining an in-house accounts payable system implies hiring an appropriately trained staff along with expenditure on the required software and hardware and training; outsourcing implies that all the above part is handled by the agency. Overall, the expenses incurred in going in for the first option is way high compared to the second option.

d.   The advantage of working with an experienced and professional outsourced firm means that the chances of error are minimal. The outsourced firm will also offer customizable services to its client so that the accounts payable system is aligned perfectly to the business goals and strategies.

e.    The business owner can concentrate and focus on the core competency of his business without having to bother about physical invoices, tracking pending payments and managing it all.

f.     Lastly one important derivative of outsourcing Accounts Payable is that the outsourced partner will work hand-in-hand with the business to make it stronger. Hence they would advise on ways and methods to improve, suggest areas of improvement and keep the owner updated on the latest technology available in the market, benefits of the same etc. A professional outsourced agency will ensure that it works with complete transparency and practices utmost flexibility when handling their business clients.

In the same breath, there are people who might argue about the cons of hiring an outsourced agency. One of the biggest arguments would be that there are chances of data mix-up between different clients. It is important to mention here that there are modern methods and technology to ensure complete data security and confidentiality so that there is zero risk of data of one company being shared with another.