Regardless of your business size, processing payments often bring inconvenience. In some circumstances, it may hamper your relations with suppliers, vendors, employees, etc. However, putting cash flow at risk is never a good idea. As a business owner, you need to maintain smooth cash flow for better financial performance.
There are two possibilities why small businesses fail to pay on time; a lack of proper accounting system or finances. These situations, if not taken care, can lead to sinking relations with stakeholders. They too have numerous bills to pay with due dates. Not being paid, they might complain, and the management will have to address the complaints. As a result, a lot of time gets wasted, which could be prevented. Moreover, the company pays more money if a late payment fee is added after the due date.
With time, your business will experience growth and have a lot of financial information to manage. If the accounts payable process is inefficient in a growing business, it can slow down most of the operations. Therefore, if the AP process is becoming another liability for you and getting difficult to manage in-house, then outsourcing accounts payable services could be your smartest step toward a smooth run of your business.
Why Do Many Companies Outsource the AP Process?
AP outsourcing service providers hold years of experience in managing accounts payable and usually utilize automated processes, helping you clear your payments on time. Additionally, as their core business is to deliver outstanding AP services, they will process your invoice copies and statements of payment quickly. As a result, your outsourcing partner will make the payments accurately before the due dates. They will use less paper than your in-house staff.
Since accuracy is the top priority in any business operation. Especially if we talk about cash flow, accuracy is vital. Your outsourcing partner will check and update your accounts on a daily or weekly basis, ensuring there’s no mistake left unnoticed.
Easy Integration with Your Accounting System
It really doesn’t matter which accounting system you use; if you choose a competent AP outsourcing firm, they will have specific tools or software to integrate with it. Moreover, if you are not getting fruitful results from your current accounting system or if it is outdated, your outsourcing partner can help you onboard the best one as per your business requirements. Easy integration allows you to get the AP process started quickly and effectively.
It is a common challenge for small businesses that they are usually unable to purchase the latest technology, or due to budget constraints, they are sticking to traditional processes. If the case is the same with you and you don’t have AP automation and other tools that save time and enhance workflows, then you may consider accounts payable outsourcing services that can help you deliver all these at affordable costs. If your business is still relying upon outdated AP processes, outsourcing can help you get better results faster.
A reliable outsourced AP process allows you to be updated about the invoices that are paid and those that are yet to be paid. Your partner will most probably provide you with an online portal using which you can see the status of each invoice from anywhere at any time. Through that portal, you may also read messages from vendors concerned about their pending payment and reply with answers.
Free Up Employees
Your company’s biggest asset is its workforce. Your employees drive your business toward its objectives. You can save their effort, time, and money that are spent on tasks that can easily be managed by an outsourcing partner. Well, if you outsource accounts payable, it doesn’t mean you need to fire employees. Instead, you can redeploy them to other essential operations of your business, such as vendor or customer relationship management.
In 2018, 78% of companies experienced some kind of payment fraud. Payment frauds often have a negative impact on the revenue of the affected company. SMBs usually don’t have enough budgets to get proper security tools or a team of security experts on board, in order to monitor financial transactions and prevent payment frauds.
In this case, one of the ideal ways to secure your business finances is to outsource accounts payable services. By minimizing the use of paper-based invoices, checks, and receipts, your outsourcing partner can reduce the chances of payment fraud in your company.
Supplier Relationship Management
The AP professionals working with your outsourcing partner have been managing accounts payable for years. They know how to maintain relations with suppliers, contractors, vendors, etc. and will do the same for your company. Additionally, as by maintaining healthy relationships, they can grab discounts from suppliers that might get ready to offer. Not only this, if your business is going through a struggling period and doesn’t have enough funds to make immediate payments, but the AP professionals can also ask suppliers for some more time. Doing such negotiations require tactics and skills that they have earned with years of experience.
Your outsourcing partner can help you with negotiating late payments and even prepare a payment plan that both parties might agree with.
Managing the AP process in-house can be very costly as it will include the AP staff’s salary & benefits, equipment, computer software, etc. Whereas, outsourcing allows you to get the same work done more efficiently in less time by those who are already equipped with all the necessary equipment and tools. This way, you can cut your operating costs as you no more need to pay full-time staff. Moreover, outsourcing companies generally charge you as per the number of invoices they process.
If you consider all the advantages discussed above, you will see outsourcing as a viable option. AP outsourcing services work best for the businesses that have been following traditional AP management practices and couldn’t achieve desired results. Apart from that, it is beneficial for those that have budgets too small to manage the AP process in-house. If you are also struggling to maintain your business cash flow, then it is the right time to consider accounts payable outsourcing services and reap multiple benefits.
It is also essential to choose the outsourcing partner wisely. Choose the one you can lay trust in. If you are already planning to outsource your company’s accounts payable process and facing difficulties in finding the perfect partner, then contact Accounting To Taxes – and accounting outsourcing company, satisfying clients for more than a decade, and trusted by many business owners worldwide. We work twenty-four hours a day, five days a week, and thus, we can provide you with unmatched accounts payable services, even amid the current pandemic.
Contact us today and get started with a free consultation. Our experts will be happy to answer your queries and provide you with appropriate solutions to your accounting problems.