While the advantages of AP outsourcing are clear, many companies are still hesitant to make the change because of uncertainty about how the transition process will work. We take a closer look at the typical accounts payable process steps involved in the transition and how these can be managed through an organizational change framework.
Letting Go: Transitioning Your Company to Outsourced Accounts Payable (AP)
Change can be hard. You know your company stands to benefit from a streamlined, dedicated outsourced accounts payable (AP) service, but the transition involves uncertainty for both management and staff.
We apply a proven four-step organizational change model to the process of handing off your in-house AP functions to a professional, managed AP services specialist like ILM Corporation.
Benefits of AP Outsourcing
By improving speed and accuracy in account processing and dramatically lowering the processing cost per invoice, AP sourcing unlocks:
- Significant savings on AP staffing requirements and overhead
- Reduced investment in AP systems and training
- Increased productivity, as staffers are freed up to focus on revenue-driving operations
- Optimized remote work force
Perceived Risks of AP Outsourcing
In reality, many companies are already aware of the benefits AP outsourcing offers their company, but are held back by organizational constraints. Typically these constraints include a lack of management or staff buy-in due to concerns about:
- Disruption of existing departments and processes
- Maintenance of security and confidentiality
- Loss of control and accountability
- Uncertainty over transition costs
Managing Organizational Change
Leadership is essential in aligning the benefits and perceived risk of change in organizations in order to maintain profitability and sustainability. While change can involve difficult decisions, the biggest threat to a transitioning organization is uncertainty.
Leaders can reduce uncertainty and increase organizational buy-in by implementing a systematic change management process. While specific strategies for managing transitions exist, including influential models developed by Kurt Lewin and John Kotter, may contain elements of the following four-stage framework that can be applied to AP outsourcing:
- Define: Align all expectations about the impact and timing of outsourcing, including:
- Who will be overseeing the outsourcing process?
- Who will be handling the outsourced services?
- Exactly what functions will be outsourced?
- Who will be involved or affected by the transition?
- What is the timeline for outsourcing?
- What are the milestones and key performance metrics?
- Design: Work with an AP outsourcing partner to understand how outsourcing will affect your organization and design a strategy to manage change and mitigate disruption, including:
- Assessing the impact on staff, customers, and strategic partners
- Creating staff, customer, and partner engagement plans
- Identify risks and create specific risk-mitigation playbooks
- Create training plans and communication channels
- Implement: Engage with staff, strategic partners, and technology/service providers to execute the change, including:
- Supporting key leaders and transition teams
- Roll out training and activate communications channels
- Monitor and manage any friction or teething problems
- Deploy risk-mitigation plans to meet identified threats
- Sustain: Continue to work with change partners like ILM Corporation to track and manage the smooth adoption of your outsourced AP system, including:
- Monitoring core AP processes
- Reinforcing key behaviors supporting outsourced functions
- Measuring the impact on your cash flow and payment efficiency
- Adjusting processes as needed in partnership with your outsourcing specialist
Don’t Fear the Process
Change can often be perceived as a loss of control by many in your organization, especially for those who are responsible for core organizational functions like AP. Others will fear possible disruptions or the reorganization of the familiar and well-established processes they are already familiar with.
In cases like this, it’s critical to provide guidance through clear communications about the transition process as well as training, mentorship, and reskilling for affected staff. It’s also important to reinforce the ultimate benefits of AP outsourcing from the perspective of the affected staff. These benefits can include:
- Less tedious paperwork or repetitive tasks
- Fewer exceptions to follow up with staff or contractors
- Fully referenced and collated invoice records
- Increased document security
- Service level agreements for maintenance of high accuracy and turnaround times
- More time to pursue value-added tasks
You can also help staff embrace change by communicating what might not be immediately obvious: the costs and negative outcomes of not embracing change. For AP outsourcing, these could typically include
- Ever increasing AP workloads
- More errors, queries, and exceptions
- Ever increasing long-tail spend
- Increased pressure to control AP costs
- Higher staff turnover or, potentially, layoffs
Most importantly, while reassigning or downsizing back-office departments will always be challenging, quality office staff have never been in shorter supply. AP outsourcing offers an opportunity to address your staffing needs by allowing you to leverage the skilled, experienced people already on your team to drive revenue, profits, and innovation throughout your organization in other valuable departments.
The ILM Corporation Difference
At ILM Corporation we understand how challenging the transition to outsourced AP can be. We work closely with every client to understand their specific concerns during the transition period— from contract award to full workflow hand-over—and tailor our services to meet these needs.
To do this, ILM has developed a flexible eight-point framework that provides support at every stage of your own organizational change program from defining and planning to roll out in order to ensure sustainable change.
A key part of our service involves taking the time to understand and map your current service (steps 2-3) before carefully designing a new one (steps 4-5) so that we can meet your needs while addressing your challenges. We also incorporate feedback (step 5) and learnings from a “soft launch” rollout (step 7) to refine and improve workflows as we scale up our processes.
Click below to learn more about how ILM’s flexible, tailored AP outsourcing services can benefit your organization today, saving you money by streamlining your back office while freeing up your best people to do what your company does best.