Incorporating software into your accounts payable (AP) processing should increase your office productivity—in theory. After all, the software can automate many manual processes and time-consuming tasks that would ordinarily require a human being to perform.
However, it’s not as easy as subscribing to accounts payable software service and watching the efficiencies and savings roll in. You will still need internal resources to implement, manage, and update.. You’ll also have to hire employees who will need to:
- Collect and open the mail
- Scan the invoice
- Apply the correct coding
- Handle exceptions and problems
Software is only as good as the data entered into it. Ad hoc systems and inconsistencies in training and supervision can lead to a wide range of problems that will immediately negate any productivity gains provided by it.
Read on to learn more about accounts payable software vs. outsourcing and which one is right for your office or organization.
What Is Accounts Payable Outsourcing?
AP outsourcing from ILM helps free up your internal team to focus on mission-critical tasks. We collect, scan, and sort incoming invoices and then use state-of-the-art artificial intelligence and machine learning to perform Purchase Order (PO) matching and data extraction.
We then perform general ledger (GL) coding to ensure that invoice line item information is being properly applied to the correct expenses categories. . Finally, we upload metadata and images of invoices and any supporting documentation such as packing slips to your ERP or accounting system.
The beauty of accounts payable outsourcing is that we can tailor it to your exact requirements. For example, we can handle the extraction of invoice information while your internal department performs the PO Matching and GL Coding. The result is increased efficiency and productivity.
Benefits of Outsourcing AP
While it’s true that you will have to dedicate one employee to manage the relationship between you and the outsourcing company, this will require far less input, resources, and impact than managing an entire internal accounting team. Clients often find that by outsourcing it requires a refresh of all processes and procedures which leads to greater improvements overall.
There are many other advantages your company will get from AP outsourcing:
When performing AP functions in-house, your team members often process and make decisions one invoice at a time. Working with an outsourcing company like ILM offers a substantial time savings advantage—we have the equipment, staff, and proven processes to efficiently capture, extract, and process large volumes of AP information. By separating invoices that have exceptions it decreases overall processing time.
Someone on your end will still need to analyze the information, but by this point, everything has been digitized, and that helps you avoid the time-intensive task of data capture and digitization.
Many in-house AP processes are ad-hoc and not very well-documented. Outsourcing your accounts payable requires careful documentation to control the outcome. Once a system is designed, tested, and in motion, it is highly controllable and flexible.
Because the system is so well regulated, it can be managed, and when circumstances dictate a change, it is highly flexible because all variables are known. Careful change management is part of the ILM process to ensure that the outcomes remain effective.
Processing millions of documents require industrial-grade hardware, software, training, systems, and experienced people. Quality management is embedded into our processes to reduce the possibility of errors along the entire production line.
The volume of accountability, training, and metrics that we monitor allows us to identify errors quickly and take steps to eliminate them from occurring again.
Decreased Labor Requirements
Outsourcing will reduce the amount of internal staff required for manual and task-oriented processes. While software can speed up the processes, there can also be hidden dangers, such as implementing new and different quality control procedures and other bottlenecks that may not be readily apparent.
In a tight labor market, outsourcing AP should enable your office or organization to free up staff to work on other tasks.
All ILM employees undergo a background check and formal HIPAA training during onboarding and on an annual basis. We also minimize the amount of information that any one person has access to. ILM also undergoes an annual SOC I Type II audit to verify our financial controls and security measures.
Outsourcing makes it much more difficult for employees to collude, hide or destroy incoming information. In contrast, your entire AP team has complete and total access to all data coming into their department.
Cost of Software vs. Outsourcing
A 2019 Ardent Research Project found that the average cost to process a single invoice in-house is $10.08 and takes up to 8.3 days. Outsourcing can offer tremendous savings over using in-house software and resources.
For example, a recent ILM client reduced their cost per invoice by 59%, from $9.38 to $3.87 per invoice. They also reduced the turnaround time from 8 to 2 days. The client had achieved a positive ROI within one year of outsourcing their AP processes to ILM.
AP Outsourcing Services from ILM
Letting ILM handle your accounts payable processing eliminates the need to recruit, hire, train, and supervise a team of workers. You’ll see increased productivity, efficiency, and security while gaining peace of mind knowing that our industrial-grade security measures help ensure your data’s safety.
Click below to learn more about our AP outsourcing services and the value they will add to your business or organization.