In any business era, supplier relationships are of utmost importance. To maintain good supplier relationships, an organization must maintain its orders and payments accurate. An organization with it’s accounts payable in place, can play the right number game with its suppliers, and maintain healthy relationships. Hence, outsourced Accounts Payable has become a prevalent practice for many organizations.
It has been understood that the most leaders of industries like, wholesale trade, real estate and manufacturing have accepted and implemented the digitization of Accounts Payable. This shall enhance their collaborations with clients furthermore.
The Accounts Payable function may not necessarily generate any return. Yet, it is a significant activity and if not accurate, then can have an adverse effect on a business.
Benefits of Outsourcing the Accounts Payable Function.
Any organization may not be able to let go of its Accounts Payable department in just a simple go. This is a non-revenue generating department and costs associated with it can be gradually reduced by adopting a few methods. One such practice is outsourcing the Accounts Payable function making way for business set ups to focus on more strategic accounting activities.
There are many difficulties which most organizations face when it comes to tracking invoices and keeping track of payments. Automation and outsourcing can help curb such obstacles.
1. Expert and Experienced Service Provider.
A business can leverage the BPO company’s experienced resources and can streamline its entire process into a new dimension. Discovering inconsistencies in the previous methods and the current methods and coming up with new plans and executing them to improve the entire system is something which the BPO can offer.
2. Lower Cost of Processing.
The books or financial statements of any firm is what the CFO’s and Managing Directors are majorly concerned about at the end of the day. But can a firm save money by outsourcing its Account Payable function? The answer is a big YES as this depends on the size of the firms and number of transactions and vendors an organization deals with. Any organization which is outsourcing, and automating can save a substantial amount every financial year if the fee structure is properly designed.
3. Why Outsource Data Entry
It has been found that firms not utilizing AP automation were able to process fewer invoices than organizations which were using the services of BPOs for their APs. Organizations usually sign contracts with BPOs for their services rendered in Accounts Payable and a good contract will always enhance efficiency, organized work standards and reliability. Parameters are set to meet the goals set up and it has been found that AP outsourcing agencies follow process management methods which increase the performance levels.
Another benefit of outsourcing is that these service rendering agencies are aware of the best practices involved in the Accounts payable operations. This saves a lot of time, energy, and resources and hence the outcome is much better and apt.
4. Focus on growth.
Data entry, matching invoices, and associated processes can be extremely tedious and time consuming. Any organization will have to have an entire team of people doing such tasks as the Accounts Payable department may not be able to take it all on its shoulders. But such things become easy when done by a specialist who is outsourced as their sole designation is to do so. The resource which was previously doing such a monotonous task can now focus on more important responsibilities. The organization can now focus on revenue generating activities and come up with more strategic work.
Also, the cost an organization invests in training and development of accounts payable resources can now invest in revenue generating activities as it has already assigned specialists to maintain its accounts payable.
5. Error free output.
Since most organizations use simple tools like Excel to keep a track of the accounts payable, making errors is but natural. Manual entries can also lead to miscalculations and misreadings.
Such a thing can be drastically reduced by simply outsourcing and automation. BPOs have their own tools and software which are up-to-date and also the chance of miscalculations is reduced as they specialize in their job roles and provide expert service.
Outsourced Accounts Payable will help in cost reduction and automates the entire process. Also, it can reduce human errors and help in maintain strong vendor relationships.
Such factors give an organization a solid and reliable reputation allowing faster growth and market visibility.