Depending on what you’re trying to achieve, you’ll either want to get an account payable audit directly from a company or via their software. Obviously, there are advantages to auditing and outsourcing, but also a couple of downsides.
To pick the one you need, you’ll have to get familiar with the pros and cons of both methods. This way, you’ll be able to justify the choice and, of course, get a better outcome from it. So let’s find out in which scenarios AP outsourcing would be beneficial and in which it wouldn’t be that much.
The Difference Between Outsourcing and Automation
Now, before we even start explaining the benefits as well as flaws of accounts payable outsourcing, let’s first shine some light on key differences between outsourcing and automation. As you understand by now, they are not the same thing. With outsourcing, you’re paying another company to audit your account payable department. They’ll provide their services, after which you’ll gain insight on flaws in your department. With automation, you’ll pay to use the software of another company to conduct an AP audit. Now that that’s clear, we can proceed towards the pros and cons of account payable outsourcing.
Pros of Account Payable Outsourcing
As you probably know yourself, outsourcing isn’t only about shifting responsibility to someone else to audit your account payable department. It gives your business value and an outside perspective on how the infrastructure of your company really looks like. Next to that, there are a couple more benefits of outsourcing that you should be aware of.
More Affordable Than Other Options
Adding numbers to your in-house account payable employees list can be rather costly. Decisions like this can create a financial drawback that you might not feel right away, but will definitely affect your business in the long run. Instead of adding more staff to your account payable department, you should try outsourcing. It’s considerably less expensive, and you’ll only have to do it occasionally. Also, adding staff to your accounting team can be a liability, as the chance for error, misplacement of receipts, or simply not following the SOP will increase.
Because the company you’re outsourcing uses automated processes to audit, it takes less time to complete these actions. They’ll also have access to a myriad of software that your account payable department might not. Next to that, they’ll be more efficient than in-house staff, as this is, after all, what they’re getting paid for.
Tracking and Monitoring the Process
With accounts payable outsourcing, you’ll have full access to the timeline of the entire process. You’ll be able to track each step and individual action and keep records of it. On the other hand, with the in-house account payable department, you’ll need a manager to supervise the shifts as well as approve actions and monitor the process itself.
Minimal Chance for Error
Another great thing about outsourcing AP audit is that the chances for error are close to zero. Because we all make mistakes, it’s best to rely on software when it comes to these things. As a single error can be quite costly for your business, not to mention reputation, it’s understandable why the majority of businesses choose outsourcing AP audits.
Not only that, but you also won’t need to worry about keeping track of required papers for the audit (as well as the headache that comes with it), and you won’t be able to misplace them. Because the company you’re outsourcing will have absolute control over sheets, invoices, documentation, and files they need from you, you’ll have fewer things to worry about.
With a good partner, your AP audit will go smoothly. More importantly, they’ll highlight potential flaws in your workflow and specific errors in your account payable departments. It goes without saying how big of an impact this may have on your company’s future. You should act accordingly to every suggestion they make, as you’ll definitely see the results of these actions in the near future. You’ll upgrade your score, minimize error, and improve the overall efficiency of your account payable department.
Cons of Account Payable Outsourcing
What’s considered as beneficial to some, others will look upon as a flaw. Just like with any other process, outsourcing account payable audit can have some downsides to it. Again, it’s merely a case or perspective.
Less Control Over Some Tasks
With accounts payable outsourcing services, you’ll have access to their workflow, but not to every assignment and action. You’ll generally see where the process is going, which sections of the department are being reviewed, etc. Furthermore, this isn’t the case with every company. By partnering with some, you’ll have limited access, or in other cases, not at all until the audit is over. This can be a good thing if you rely on their services completely and don’t have a single doubt about their level of expertise. In other words, once you start the process, you won’t have full control until the matter is done.
Again, you should only choose to outsource if you have a reliable partner in mind or one with an impeccable reputation. Why? Because although you’re choosing to outsource to minimize error in your department, you might create additional problems. Duplicated submissions, or outsource invoice processing errors, for example, can create tremendous problems. The first one being that you can’t track it or get insight on how it happened. So instead of solving a problem, you’ll add more to your already overflowing list of existing ones. You’ll have to inspect the entire system and pull in more workforce in your account payable department to avoid a considerable loss.
A Matter of Dependence
We can’t stress enough how important it is to pick the right partner when it comes to outsourcing accounts payable. You’ll completely rely on their services to upgrade your business and improve your entire account payable department. If something happens to the company you’re outsourcing to (a security breach, bankruptcy, etc.), it will directly affect your business as well. You’ll have no one to turn to, and you’ll end up having to solve the problems by yourself again. This will put you in a situation to have very few options – increase the number of your in-house staff or get another company to do the audit.
The Bottom Line
Although it can be risky, outsourcing accounts payable can be extremely beneficial to your business. It all depends on who you turn to for services. So take cautions when picking a partner and be mindful of their level of expertise as well as reputation. Paying a bit extra ensures that you get efficient and impeccable service. For more information on available accounts payable services, be sure to visit our website!