Accounts payable outsourcing can help take the pressure off overstretched staff, but many managers still worry about privacy, control, and integration issues.
Home or Away? Seven AP Outsourcing Myths Considered
Good accounting staff can be hard to find, especially these days. Many business owners and managers are looking to outsource accounts payable (AP) functions to allow staff to stay focused on revenue-driving operations but worry about losing control over a critical business function.
Let’s take a look at what accounts payable outsourcing has to offer before considering some common concerns about tapping outsourcing services.
What Is AP Outsourcing?
Accounts payable outsourcing involves hiring an outside service to collect, track, and process invoices for the essential goods and services your company buys on credit. An AP Service typically needs to:
- Accurately scan or manually enter invoices
- Verify vendor information
- Check invoices against purchase orders
- Identify exceptions or payment mismatches
- Accurately code line items to the general ledger (GL).
- Assist with routine archiving and reporting functions.
What Are the Benefits of Outsourcing?
Outsourcing can offer significant advantages, especially for small firms that might not be able to support a dedicated accounts department, or medium to large firms that are looking to increase the productivity of their AP departments.
AP outsourcing experts like ILM are document management specialists with secure, dedicated systems and processes in place to collect, process, and share AP information. That offers clients some big advantages, including:
- Streamlined, optimized AP processes
- Faster turnaround and payment times
- Reduced costs per invoice
- Better general ledger control
AP companies can also offer clients a range of reporting as well as administrative and tracking services. For instance, ILM offers scanning, reconciliation, and archiving services and can also assist clients in analyzing and optimizing their payment systems.
When companies hand off AP administrative work, one of the biggest benefits is the ability to focus more of their energy on running the customer-facing side of the business, rather than on back-office affairs.
Outsourcing Myths and Reality
Now let’s take a look at seven commonly expressed concerns about AP outsourcing.
1. Your Business Will Be Dependent on an Outside Party
Many owners and managers worry about being dependent on an outside party for a critical business function. Outsourcing AP is a big step and it always pays to partner with a company with a strong track record. ILM offers decades of experience serving hundreds of businesses, federal and state agencies, and non-profits—with a satisfaction rate of over 98%. Any outsource partner should be transparent in their operation and provide the AP information back to you in a non-proprietary format such as PDF.
2. You Will Suffer Incompatibility and Teething Problems
No handover process is perfect and due diligence needs to be performed, but integration is a lot simpler than it used to be. Many companies are also increasingly comfortable with storing and sharing information in the cloud as well as submitting invoices electronically.
Major players also work hard to integrate with clients’ existing systems. For example, ILM offers out-of-the-box integration between its systems and several major ERP platforms.
Any change will require a detailed transition plan that addresses all the steps in the process and potential risks and how they will be mitigated.
3. Your Data and Privacy Will Be Compromised
There’s not a lot of evidence to suggest your information is safer in-house than it is with a reputable AP outsourcing partner, but it does pay to work with people who take security seriously. ILM offers:
- Certified Information Security Systems Professionals (CISSP) IT staff
- HIPAA-compliant systems
- SOC 1 Type 2 audit
- Is housed in a DHS-approved facility
By disassociating your work to a third party, you greatly reduce the chance of fraud or collusion.
4. You Will Lose Control Over Payments
Accounts Payable Outsourcing is not the same as accounts payable automation. AP Outsourcing does not necessarily include payment approval or automation. ILM still routes all payment information through our client’s in-house ERP system for settlement.
5. The Accuracy of Your Data and Records Will Suffer
Major AP providers are document management specialists. Data management is all we do. At ILM, our advanced scanning systems help to reduce errors by keeping manual entry to a minimum, while our AI-driven reconciliation systems work to pick up errors on the fly.
6. You Will Still Need to Resolve All Queries and Exceptions
AP Outsourcing services offer increasingly sophisticated systems to reconcile invoices with vendor validation, purchase orders, and resolve exceptions and other queries using available data. ILM has used AI-driven intelligent document processing and machine learning to achieve huge reductions in the number of reconciliations generated by the data we process.
7. You Will Not Be Able to Communicate With Your Service
While small operations may be tempted to keep clients at arm’s length, reputable services have a significant stake in staying close to their clients. Outsourcing is a valuable business relationship that works both ways. At ILM we assign a dedicated project manager to your service as your single point of contact for all concerns, queries, or feedback.
AP Outsourcing: Your Partner Makes the Difference
ILM offers significant expertise and experience in managing digital mailrooms and AP outsourcing for a wide range of clients. We use world-class project management skills and AI technology to:
- Guarantee accuracy
- Ensure security
- Reduce cost per invoice
- Optimize payment processing
We aim to reduce the time, cost, and headaches of accounts payable so that you can focus on the things that make your business great.
Click below to learn more about our AP Outsourcing Services.