Why You Should Think About Outsourcing Accounts Payable

A business team deciding whether they should outsource their accounts payable.

Managing your company’s accounts payable function (A/P) is critical to running a successful business because it has a tremendous impact on cash flow.

You need to make sure you have cash on hand to cover external expenses, such as paying your vendors on time. You also need to take care of your people by covering internal expenses such as payroll. That’s why it’s essential to have the right resources to support accounts payable.

As your company grows, you may need more resources to handle the day-to-day accounts payable requirements. You could hire, but increasing headcount is costly, and it might not be the right time to add another staff member to your team because of other priorities.

Instead, outsourcing accounts payable may be the key to maintaining efficiency, supporting cash flow, and satisfying payment deadlines.

Signs You May Need to Outsource Accounts Payable

Not sure whether outsourcing A/P is right for your business? Consider these common signs that it’s time to consider using a third party to support your Accounting department.

A/P Team Overwhelmed with Workload

The workload for A/P teams can be overwhelming, especially during periods of rapid growth.  While this increase in revenue is terrific for sales, it adds extra pressure to the A/P staff to manage the expenses tied to growth.

Vendor Relationships Suffering

Customer service is essential in your vendor relationships, as vendors have the ability to pull contracts if they find your company too challenging to work with.

If your team is habitually late with payments or completely missing due dates, vendors will constantly be in touch with the A/P department to track the status of their payments. Taking time to manage vendor relationships will take time away time from other critical functions.

A/P Process Lacks Control

Mistakes are bound to happen with any Accounting process, but they are preventable. Without the right processes and resources in place, your business could suffer from missed payments or double payments if the A/P team is struggling to keep up. Things like duplicate payments can cost your business a lot of money and time.

Benefits of Outsourcing Accounts Payable

If you are seeing signs that your A/P team is struggling, consider the benefits of outsourcing.

  • More access to resources, especially during busy periods.
  • Potential to reduce costs by reducing overhead.
  • Better use of time not having to recruit, hire, and train a new full-time employee.
  • Improved administrative reporting and tracking.
  • Increased efficiency and a reduction in errors by utilizing A/P experts.
  • Better screening to avoid double and duplicate payments.
  • Eliminates the need to cover for absent employees.

Increased Resources

A reliable outsourced A/P provider will be able to integrate with your existing processes and use automation platforms to support workflows. They will have systems in place to handle payment processing, vendor management, and administrative tasks.

Reduce Overhead Costs

Not having to provide office space, equipment, salary, and benefits to a new employee will reduce your costs. Additionally, you won’t have to worry about the “hidden cost” of spending time and energy trying to find the right person for the role.

No More Dependence on Just a Few People

Worried about how A/P will be handled if key employees are out sick or request a leave of absence? Outsourcing accounts payable allows you to always have an available team to manage your organization’s needs.

Improve Administrative, Reporting, and Tracking Activities

The A/P team you work with will often provide reporting on key elements such as time to payment, cost per invoice, and cash on hand to cover upcoming expenses. They can also help with A/P document management, analysis, and reconciliations.

Increase Efficiency and Reduce Errors

Your selected outsource resource will stay on top of deadlines to help you pay vendor invoices on time or early, which will increase supplier and vendor relationships.

Avoid Double and Duplicate Payments

No more double payments or duplicate payments that require effort to track down and reverse the activity. An outsourced resource will keep your A/P function organized so that these types of crucial mistakes do not happen. This way, your cash flow will be protected by not paying twice for one invoice.

Tips for Switching From In-House A/P to Outsourcing A/P

Not sure how to make the transition from primarily handling accounts payable internally to relying on an external resource? Here are three tips to find success in making the switch.

Research Resources

  • Research the companies you want to work with.
  • Gather testimonials about the experiences that other businesses have had when working with each provider.

Prepare Your Team

It’s essential that everyone on your Accounting team is on the same page when choosing to outsource the A/P function. Employees must be made aware of how responsibilities and roles may change. All changes, such as how data will be entered into your system, should be clearly communicated.

Monitor the Transition

Once you make a decision, consider using a performance monitoring tool to evaluate whether your new resource is delivering as expected. Use the tool to track improvements and gain insight into how your provider is performing.

Finlyte: a Reliable Provider of Outsourced Accounts Payable

We understand that growth can happen quickly. You don’t want to lose momentum because of gaps in your A/P function. Our team of accounting experts can step in to provide your company with the resources you need to handle day-to-day accounting activity and monthly functions:

  • A/P processing
  • Entering bills
  • A/P approval process
  • Purchase Order (PO) matching
  • Invoice capturing
  • Payment processing
  • Contractor/vendor payments
  • Reconciliations
  • Sales tax reporting and filing by location/by state
  • Monthly balance sheet reconciliation
  • Cash flow reporting
  • Archiving records

Finlyte was recently named the NetSuite Breakthrough BPO Partner of the Year because of our commitment to providing exceptional outsourced accounting and business process services to our customers. Let us show you why now is the time to consider outsourcing accounts payable to our team.

Contact us today to schedule a consultation. We can support your cash flow during growth.