Issues with Outsourcing AP

ap outsourcing

Outsourcing AP and other financial tasks are not new phenomena. A recent outsourcing study by Deloitte found that 42% of their respondents outsourced finance functions and 36% planned to increase the use of finance outsourcing. Outsourcing in itself is not a bad strategy, but there can be some significant issues, especially when it relates to outsourcing AP.

Not Scalable

Outsourcing AP in itself does not guarantee scalability. How would your supplier handle the slow and busy periods of your business? What happens if your business grows, are they able to grow with you? In some cases, increasing volumes with vendors can actually increase costs as additional management and support are needed.

Missed Discounts and Terms

Supplier quick pay discounts can mean significant savings for your business. Outsourcing AP does not mean that you will be able to hit these targets. Check with your potential partners to see if they can consistently hit the quick pay targets as part of their service level agreement.

Finding Information

Outsourcing AP companies focus on economies of scale as it relates to their process. This doesn’t mean that downstream processes around things like information retrieval have been optimized.

Missed Savings Opportunity

Throwing lower priced labour with slightly better processes will provide some short-term savings. Much higher savings are missed by not looking at ways to use technology and automate the process. Removing manual processes should be a big part of an AP cost reduction plan.

Before you outsource your AP, explore automating the invoice process. At OnePosting we have been able to help companies save as much as 80% of the costs associated with the AP process. At the same time, we can improve visibility on data, create opportunities for quick pay discounts, and much more. If you are interested in seeing how OnePosting can help your organization with its digital transformation around invoicing, book a meeting with our team.

Subscribe to Our Newsletter

Never miss a beat by joining our mailing list.

Mark Elliott
Latest posts by Mark Elliott (see all)