Outsourcing Accounts Payable with a reputable third-party company like IQ BackOffice has many benefits. There is also one important drawback to consider as well.
In this article, we take a look at some advantages and disadvantages to this important decision.
Benefits of Outsourcing Accounts Payable
Companies that outsource AP can achieve many significant benefits including:
- Automation – outsourced AP firms generally have state-of-the-art technology that provides better transparency to the process overall as well as reduced cost
- Cost Reduction – outsourcing firms can usually perform AP less expensively due to their investments in automation and scale, as well as their expertise
- Process Improvements – outsourcing firms perform accounts payable faster due to their expertise and automation; a good outsourcing firm will generally process invoices without exceptions in less than 24 hours
- Improved Quality – outsourcing firms typically are up to date on the latest rules and regulations. In addition, their greater use of automation and improved controls improve quality significantly. A good outsourcing firm should have at least 99% quality, which is much better than internal AP departments.
- Focus on Core Competencies – by outsourcing, you rely on the firm to perform accounts payable on time and with excellent quality, freeing management up to focus on more important, value-added activities.
- Tracking and Reporting – because outsourcing firms focus on AP, they have better data and reporting on these activities than your company would normally have
Disadvantages of Outsourcing AP
There are some disadvantages to outsourcing AP though, including:
- Fear of Loss of Control – managers often fear that outsourcing will lead to loss of control around the function that is outsourced. Traditionally, it has felt more comfortable to have someone in your office that you can ask questions about the status of something. People are just starting to become more comfortable with working via the cloud with remote teams.
Read More about this topic: