The money your business owes its vendors/suppliers is known as its Accounts Payable or AP.
On your balance sheet, this is a liability.
As a result, companies often consider Accounts Payable a back-office cost center.
In this article, we’ll delve into what accounts payable BPO means and the difference between AP outsourcing and AP automation.
We’ll then list the seven key benefits of outsourcing your accounts payables, which AP tasks you can outsource, and the top five accounts payable BPO service providers you can partner with to receive these benefits.
This article contains:
(Click on the links below to jump to a specific section)
- What Does Accounts Payable BPO Mean?
- 7 Key Benefits of Outsourcing Accounts Payable
- Accounts Payable Tasks You Can Outsource
- Top 5 Accounts Payable BPO Service Providers
Let’s get started.
What does accounts payable BPO mean?
When you hire a third party to handle your accounts payable process, that’s called Accounts Payable BPO.
A BPO (Business Process Outsourcing) service provider usually has all the essential tools, knowledge bases, and staffing to help you better manage your working capital and cash flow.
With the right outsourcing company, you can turn your company’s accounts payable department into a strategic business process.
By optimizing your accounts payable function, you can free up working capital, build vendor goodwill, quickly mitigate funding gaps, and even strengthen your negotiating power.
To help with this, many AP service providers also provide Accounts Receivable (AR) services.
Accounts Payable deals with the money you owe to your vendors, while Accounts Receivable deals with the money you’re owed. They both come together to provide a clear picture of your company’s financial situation.
Outsourcing vs. automation
AP outsourcing is different from AP automation.
Under automation, your in-house team uses a third-party’s AP software to streamline its accounting processes. On the other hand, when you outsource, a third party runs your AP department.
But there can be some overlaps, as your AP outsourcing partner may use automation software to increase efficiency.
If you want to simplify things for your in-house team, you could consider purchasing third-party accounting software. However, outsourcing is the right option for you if you wish to take the entire workload off their hands and scale easily.
7 key benefits of outsourcing accounts payable
Let’s explore the seven key benefits of outsourcing your AP processes:
1. Cut costs
One of the primary reasons companies outsource operations is cost reduction.
Hiring and managing an in-house accounts payable team can be incredibly expensive. They would need proper training, up-to-date equipment, and access to new technologies.
But you can avoid the overhead costs of maintaining an office and the human resource costs of training your AP workforce through outsourcing.
Since the third-party provider is already equipped with all the necessary staff and equipment, you gain access to experienced AP professionals at a fraction of the cost.
Additionally, since most AP service providers charge per invoice instead of per hour, you can expect significant transactional cost savings.
2. Access to skilled resources
For an in-house AP team, you need to manually search for the latest technologies, check reviews, pay for licenses, and keep updating them. On the other hand, AP outsourcing companies always have access to the latest technologies and tools of the trade.
So, by outsourcing, you can gain instant access to these resources.
Additionally, outsourced teams consist of professionals who are specifically trained in AP processes. They’re more likely to stay ahead of the curve by adopting these new technologies as they enter the market.
And usually, outsourcing companies also use automation software to optimize AP processes and provide seamless ERP Integration.
ERP, or Enterprise Resource Planning, is a centralized database management software. It combines data from various departments, such as accounting, project management, procurement, and risk compliance.
A cloud-based ERP, in particular, can help your outsourcing partner collaborate with you more effectively and in real-time.
3. Increased efficiency
Through ERP and other automated software, the entire accounting process gets fast-tracked and streamlined.
The outsourcing company processes all incoming invoices quickly as this is their core business function. They also have a predefined workflow that allows them to get your work done rapidly and accurately.
As a result, you get more time to focus on your core business activities, such as vendor relationship management and cash flow optimization.
Since your payable tasks are delegated and completed quickly, thanks to your outsourcing partner, you could also focus on boosting employee productivity in your organization.
4. Tighter security controls
Most startups and SMEs (small and medium-sized enterprises) can’t afford to hire their own accounting security teams. So, it can be hard to stay on top of constantly changing rules and regulations.
Your outsourcing partner, with their accounts payable automation software, can help bridge this gap.
As they already have access to the latest security tools, they can minimize the chance of fraud and non-compliance.
For instance, a common payment fraud issue is duplicate invoice payment. A robust outsourcing firm can run extensive audits and eliminate such risks quickly and easily.
Since BPO service providers typically follow standard industry guidelines, they can help you enforce these security controls while providing greater visibility into the day-to-day operations.
5. Error minimization
Many companies use Excel spreadsheets for their accounting. If you do the same to track your accounts’ payables, chances are it’s riddled with errors.
This is because spreadsheets often require manual data entry. As a result, even minor human errors can quickly turn into serious liabilities.
For example, slow AP processing or an overlooked vendor invoice can lead to late payments.
If this is a common occurrence, the vendor might become unhappy and cut ties with your company.
By incorporating technology into your accounts payable process, your outsourced team can help you avoid these situations and form long-lasting vendor relationships.
6. Flexibility to scale
If your business has an outstanding quarter, it’ll require more accountants and bookkeepers.
In such situations, the company’s CFO (Chief Financial Officer) typically handles the additional workload. It’s the same if an in-house employee cannot attend work.
While this is doable once in a while, constant extra work can cause your CFO and other supervisors to burn out.
Accounts payable outsourcing companies have plenty of staff, cross-trained to take over absent in-house employees. They’re well-versed in handling multiple AP tasks simultaneously without feeling overwhelmed.
These outsourcing companies also use automated tracking software to help you, the client, view every step of the accounting process in real-time.
With this instant and continuous access, you’ll never be in the dark about your procure-to-pay process again!
7. Reduced carbon footprint
Financial services are notorious for the sheer amount of paperwork they require.
Every invoice carries a massive paper trail of additional receipts and purchase orders.
Accounts payable outsourcing is one of the easiest ways to reduce your carbon footprint as it instantly removes the need for paper invoices. This is because your outsourced accounting service team moves everything online to send you the necessary receipts in a timely manner.
Accounts payable tasks you can outsource
When it comes to outsourcing, labor-intensive and time-consuming tasks that don’t require access to sensitive company data are your best bet.
Some commonly outsourced AP tasks are:
- Document management.
- Matching incoming invoices with purchase orders.
- Purchase order processing.
- Creating debit memos.
- Accounts reconciliation.
- Three-way matching (matching the purchase order, invoice, and receipt note).
- Electronic invoice processing.
- Travel and expenses processing.
- Batch creation.
- Auditing scanned invoices.
These services encompass the entire AP process of receiving, reviewing, and approving the vendor invoice, ending with payment. As a result, this process is also called the procure-to-pay process.
But which AP service provider should you go for?
To help you decide, let’s look at five excellent accounts payable BPO service providers you can choose for AP outsourcing.
Top 5 accounts payable BPO service providers
There are many factors you need to consider when choosing your ideal outsourcing partner.
You’ve got to check their previous work (case studies) and online reviews. Additionally, you have to ensure they have the necessary infrastructure to protect your data.
All of this can take up a lot of your time.
To make this process a lot easier, we’ve listed the top five accounts payable outsourcing service providers across the globe:
1. MAX BPO
Headquartered in Noida, India, MAX BPO has hundreds of customers across 30 countries.
They provide BPO services in many industries, such as healthcare, finance and accounting, e-commerce, and telecommunications.
Their in-house trained bookkeeping experts comply with all federal, state, and local laws to offer reliable and secure accounting services. They also provide quick and easy-to-implement accounts payable outsourcing services carefully designed for your specific business needs.
Offering 24/7 client support and web access, MAX BPO is committed to providing end-to-end AP services to help reduce your costs and boost growth.
2. Ricoh USA
Ricoh USA, an information management and digital services company, is actually headquartered in Ota, Japan.
Their financial outsourcing services are focused on improving workflows and accelerating data capture while reducing costs and improving employee productivity.
Ricoh provides a full suite of accounts payable and receivable services, such as:
- Managing your day-to-day accounts payable processing.
- Delivering the appropriate financial and procurement data timely for strategic decision-making.
- Ensuring a smooth customer invoicing experience.
- Eliminating processes that can lead to duplicate invoices or late/lost payments.
By utilizing a unique blend of automation and intelligent data capture, their AP services can help shorten your payment cycles and strengthen existing vendor relationships.
3. Invensis Technologies
Invensis Technologies is a leading IT and BPO service provider with its headquarters in Bengaluru, India. They provide customized accounts payable outsourcing services with an emphasis on data security and confidentiality.
You can control your expenditure pattern by outsourcing accounts payable to Invensis while receiving special discount privileges from vendors.
They can help clear all your unpaid bills by the stipulated time, ensuring you don’t have to incur any fines or interest on late payments.
Additionally, Invensis can help improve your procure-to-pay process, leading to increased compliance and reduction in future leakage.
4. ARDEM Inc.
ARDEM Inc. is an outsourcing company specializing in providing automated business solutions.
Their headquarters is in New Jersey, USA, with an operations office in Lucknow, India.
They follow a rigorous AP process covering receipt, 3-way matching, to payment. Using flexible automation, they can provide 99.97% accurate accounts payable solutions.
A large pool of talented and qualified analysts can start working for you within 14 days.
And having worked with multiple accounting systems, they’ll seamlessly transition with your existing system.
ARDEM has an impressive roster of clients, including Habitat for Humanity, HubSpot, H&M, and CNN.
5. Kensium BPO
Specializing in litigation support, Kensium BPO provides customized accounts payable management services to companies worldwide.
Headquartered in Chicago, USA, they have over 14 years of experience in invoice processing and other outsourced accounts payable services.
They provide two AP outsourcing models:
- Online: Their experts review your invoices directly on your AP platform. They have worked with Oracle, Vision 360, SAP, and other AP platforms.
- Offline: Send your scanned invoices, and Kensium will send back the invoice details in the format of your choosing.
All invoices, online and offline, are processed within 12-24 hours. Due to their close attention to detail, they have an impressive 99% accuracy rate.
Outsourcing your accounts payable function can be highly beneficial for your company.
It can help with cost reduction while automating the entire process. Accounts payable automation can also reduce human errors and strengthen vendor relationships.
These factors can give your organization a solid and dependable reputation, allowing you to grow faster.
And while there are many AP service providers in the market, you can check out the ones we listed here to ensure you receive high-quality accounts payable service on every invoice.
Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.