There are some corporate functions that lend themselves well to being outsourced. Efficient and effective accounts payable is a goldmine when you strike the right balance, but it can be a real drain on resources and can come with high opportunity costs if you don’t get it right.
Many businesses make their attempts at improving the functionality of their accounts payable by investing in expensive software that makes the role easier, and maintains a sense of cohesion between staff members. However, good software can be prohibitive, depending on the size of the department.
Why do so many businesses choose to outsource their accounts payable function?
Recently, Canon partnered with Paystream Advisors to survey businesses about their accounts payable and found that they were outsourced because of the following key challenges:
- Paper invoicing was still common, and the majority of invoices were received on paper
- Manual data entry takes up a lot of paid staff time, along with all the associated overheads
- Invoices needed to be manually routed for approval from other staff members
- When performed in-house, there were a high number of discrepancies and exceptions in the reporting
- The in-house process was slow, so the invoices ultimately increased in price as they didn’t mean requirements for discounting
- Receiving invoices couldn’t be adequately centralised
- Invoices were missing or lost
In-house reporting wasn’t adequately capturing real-time data regarding outstanding liabilities
Those organisations that had chosen to outsource their accounts payable found that it had been the critical step for cost control of the department and for high performance.
Some organisations chose not to outsource the entire process, but to outsource part of it. The accounts payable process can be broken up into the following segments:
1. Mailroom tasks, including opening envelopes
2. Invoice scanning and work queue management
3. Data entry
4. Storage, search and retrieval (key to record keeping)
5. Internal routing for approval
6. Reporting, support and help desk
As you can see, there are many options for outsourcing that will benefit your accounts payable process. You can select the components of your process that could benefit from greater efficiencies, or you could realise the benefits of outsourcing for the whole process.