Accounts Payable AP Outsourcing in 2024: Pros, Cons, and Evaluation

Get ready for a laugh-out-loud adventure through the murky waters of provider selection. ILM Corp., the superhero of outsourcing, swoops in to save the day with their trusted services. Watch as they effortlessly handle your accounts payable needs, leaving you in fits of laughter at their incredible efficiency. ILM Corp. will have you wondering if they have secret access to a parallel dimension where time runs faster and paperwork is hilarious. The stuff of nightmares for anyone who enjoys not banging their head against a wall. With accounts payable outsourcing, witness the magic of simplified payment processing that will make you wonder why you didn’t embark on this adventure sooner.

1. Third-party AP service providers offer professional teams and the latest software to do the job.
2. Accounts Payable SSC is a unit that handles all accounts payable transactions for more than one business unit within the organization, and sometimes, they control the invoice-to-payment processes for several entities.
3. As you’re not physically present where the tasks are performed, it can be difficult to manage any issues that pop-up.
4. For example, the average salary for an in-house AP clerk in the United States averages around $45,366 annually, not including benefits and taxes.
5. Therefore it’s unlikely to provide the same level of cost reduction as outsourcing.
6. Before outsourcing AP, review your provider’s privacy policy and data security measures to ensure they meet your standards.

What are accounts payable services?

This flexibility negates the need for internal staffing adjustments, which can be both time-consuming and costly. In-house operations often require substantial investment in technology and infrastructure. A robust AP software suite alone can cost upwards of $10,000, coupled with production units maintenance and upgrade fees. By transitioning to an outsourced model, businesses can expect to see a reduction in overall AP costs by as much as 70%, a figure drawn from our extensive experience and market analysis in the field.

Stronger Security

If your current accounts payable process has considerable cash leaks or issues, moving to outsourced AP may improve budget optimization even after the cost of service fees. The average cost to process an invoice is as high as $15, and outsourcing or automation may offer up to a sixfold reduction in processing costs. Third-party AP service providers offer professional teams and the latest software to do the job. When you outsource AP tasks to them, you gain access to excellent tools such as computer systems complete with customized invoicing, expense management, and other accounting software. Accounts payable outsourcing is the practice of hiring a third party to handle your organization’s AP processes. AP providers come fully equipped with the tools, skills, and technology not only to manage your existing accounts payable functions but also to integrate new capabilities to give you a more streamlined environment.

Knowing how to outsource your Accounts Payable lets you focus on strategic priorities

A good AP service provider should offer a comprehensive range of services. This can include invoice processing, payment execution, tax and regulatory compliance, and even strategic financial planning and analysis. Having a full suite of services ensures that all your AP needs are covered under one roof, simplifying management and communication. The cons of outsourcing accounts payable services include potential risks related to data security and a grant writing fees possible loss of control over critical financial processes.

Genpact: Driving Efficiency in Accounts Payable

According to most case studies, companies typically use process outsourcing to add value to their businesses and to improve AP dramatically. ILM is a Virginia-based provider of accounts payable services to commercial clients, government entities, and nonprofits. They utilize artificial intelligence and machine-learning algorithms in their smart-scanning and exception-handling technology, ensuring efficient accounting and bookkeeping services and accurate invoice receipt and processing. While cost is an important factor, it should not be the only consideration.

As you outsource AP tasks that were previously carried out by the in-house team, your employees might have different responsibilities and day-to-day tasks. While you may not be able to access the exact data about their projects, case studies and accounts of the provider’s previous work give you an idea about their quality. To outsource your accounts payable easily, here’re a few things to keep in mind. Most businesses have a few exceptions and business rules in their accounts payable workflow. Outsourcing accounts payable takes most of this workload off of your AP team supervisor. Even if some employees are absent, the stress of covering up does not land on a sole supervisor.

According to Grand View Research, the global accounts payable outsourcing market is projected to reach $5.4 billion by 2027, growing at a CAGR of 9.4%. This growth is driven by businesses recognizing the value of outsourcing non-core functions to focus on their primary objectives. You should also pick partners used to working with similarly sized organizations. With less scale, smaller enterprises need more flexibility from outsourcing partners than multinational corporations. Larger outsourcers are less willing and able to customize solutions because their operations are structured to handle large volumes. Benchmarking your AP organization to your peers can help you identify the greatest opportunities for improvement and ROI.