Why Accounts Payable Outsourcing is More Attractive than Hiring an In-House Team

Managing your company’s finances, especially accounts payable, is crucial for keeping the business running smoothly. Accounts payable refers to tracking and managing the money you owe to suppliers, vendors, and creditors. Keeping these payments on time helps maintain strong relationships with your business partners. It ensures your company operates without financial hiccups.

Now, you have an important decision to make: should you manage accounts payable internally or consider accounts payable outsourcing? Many businesses face this choice, weighing the benefits and drawbacks of each. In this blog, we’ll focus on one key factor—cost. Is accounts payable outsourcing actually cheaper than hiring an in-house team? Let’s break it down.

First, let’s explore the costs associated with managing accounts payable internally. When you build an in-house team, you’re hiring employees to manage and oversee your business’s financial obligations. Here are some of the common expenses you’ll face:

1. Salaries and Benefits

You need to offer competitive salaries to attract skilled accounts payable professionals. Along with salaries, there are added costs like health insurance, retirement plans, and paid time off that add to your overall expenses.

2. Training and Development

Employees need to stay updated on industry standards and best practices. This means continuous investment in training programs and professional development.

3. Office Space and Equipment

Your in-house team will need desks, computers, and other office equipment. You also have to account for office space, rent, utilities, and maintenance costs.

4. Software and Technology

To streamline accounts payable processes, you’ll need to purchase and maintain specialized software. This technology can be costly, and updates may be required regularly.

5. Turnover Costs

Employee turnover is inevitable. When someone leaves, you’ll need to recruit, hire, and train a new team member. This costs both time and money.

6. Errors and Late Payments

Mistakes happen, and human error in accounts payable can lead to late payments, resulting in penalties or strained relationships with suppliers.

7. Scalability Issues

If your business grows or has seasonal fluctuations, you may struggle to scale your in-house team up or down quickly to meet demand.

Now, let’s look at accounts payable outsourcing. By outsourcing, you hire a business process outsourcing (BPO) provider to manage your accounts payable. Here’s what outsourcing costs look like:

1. Service Fees

Outsourcing involves paying the service provider. These fees are often structured either per transaction or on a monthly basis, depending on your needs. 

2. No Employee-Related Costs

One big advantage of outsourced accounts payable is that you won’t have to pay salaries, benefits, or worry about employee turnover. The outsourcing company handles everything for you. 

3. Lower Office Costs

Since the account payable service provider operates independently, you don’t need to allocate office space, equipment, or technology to them. They provide their own resources, saving you on overhead costs. 

4. Access to Skilled Professionals

By outsourcing, you gain access to experts who specialize in accounts payable outsourcing. This ensures that your accounts are managed efficiently by professionals who know the ins and outs of the process. 

5. Easy Scalability

With outsourced accounting services, you can easily scale the volume of accounts payable. Whether your workload increases or decreases, the outsourcing company can adjust accordingly without any hassle on your end. 

6. Fewer Errors

Accounts payable outsourcing providers use advanced tools and quality control processes to minimize errors. This helps ensure that payments are accurate and on time. 

7. Time Savings

By outsourcing, you and your internal team can focus on core business activities. This can lead to increased productivity and potential revenue growth. 

So, which option is cheaper? The answer depends on your business’s size, industry, and invoice volume. However, outsourcing is often a more cost-effective solution for many companies. Here are some factors to consider when making your decision:

1. Scale and Volume

If your business handles a large number of invoices, outsourcing can be more cost-effective. It is due to the efficiency and scalability of outsourced accounts payable. For smaller businesses, handling it in-house might make more sense if the invoice volume is low. 

2. Expertise

An accounts payable outsourcing provider brings specialized knowledge and experience to the table. If your in-house team lacks that level of expertise, outsourcing can save you money by reducing errors and streamlining processes. 

3. Flexibility

Does your business experience changes in the number of invoices you process? Outsourcing allows for flexibility—you can increase or decrease support as needed, leading to cost savings during slower periods. 

4. Error Reduction

Consider the costs of errors in your accounts payable process. Late payments, penalties, and damaged relationships with suppliers can all add up. Accounts payable outsourcing may be a cost-effective way to minimize errors and avoid these issues. 

5. Overhead Costs

Factor in the overhead costs of maintaining an in-house team, such as office space, equipment, and software. Outsourcing eliminates these expenses, making it a more attractive option. 

6. Opportunity Cost

Think about the opportunity cost. By having your in-house team focus on accounts payable, they may be neglecting other tasks that generate revenue. By outsourcing, you free up your team to concentrate on business growth. 

As a trusted business process outsourcing partner, ARDEM offers a range of services designed to help your business succeed.

1. Accuracy and Precision

ARDEM prioritizes precision in accounts payable outsourcing. Our experienced team ensures that every invoice is processed accurately. This minimizes errors and late payments that could lead to costly penalties. 

2. Speed and Efficiency

Time is money. ARDEM guarantees quick and efficient processing of your accounts payable tasks. We ensure payments are made on time. This helps maintain good relationships with your suppliers. 

3. Cost-Effective Solutions

One of the biggest advantages of choosing ARDEM for outsourced accounts payable is cost savings. You won’t have to hire or manage an in-house team, and our services are priced competitively to fit your budget. 

4. Scalability

Whether your invoice volume increases seasonally or due to growth, ARDEM can easily scale its support. You won’t have to worry about staffing shortages or overwhelming workloads during peak periods. 

5. Industry Expertise

Our team is experienced in handling accounts payable outsourcing for a variety of industries. No matter what sector your business operates in, we have the expertise to ensure smooth and efficient processing.

6. Advanced Technology

At ARDEM, we use the latest technology to streamline your accounts payable process. This includes tools for automation, data entry, and error-checking. Thus, we ensure that your workflows are optimized for efficiency. 

7. Data Security

We take data security seriously at ARDEM. Our strict security measures protect your sensitive financial information. Thus, we ensure that your accounts payable processes are secure and compliant with regulations. 

8. Focus on Core Business Activities

By outsourcing accounts payable to ARDEM, your in-house team can focus on what truly matters. That is growing your business and serving your customers.

Accounts payable outsourcing offers a cost-effective alternative to managing this critical function in-house. By partnering with ARDEM, businesses can reduce costs, gain access to expertise, and streamline their financial operations. You may be looking for precision, scalability, or time savings. ARDEM’s outsourced accounting services can provide the solutions you need to succeed. For more information on how ARDEM can help with accounts payable outsourcing, contact us today.