Accounts Payable Outsourcing: 4 Pitfalls & How to Avoid Them?
When an organization outsources its accounts payable outsourcing services, it hires a third party to process and pays its bills on its behalf. The tasks involved here might have a wide range of scope. An Accounting Payable Process Service department may handle a single charge, such as invoice entry, processing, or the whole cycle, from approvals to payments.
Your goals and approach to Accounts Payable Services will determine the best course of action. Now, let’s take a closer look at the options you’ve been given.
Four issues to avoid while outsourcing AP:
Selecting your next outsourcing partner will likely run against the following problems. Being aware of these prospective issues might help you avoid them.
1. Not putting your current procedure down on paper
It’s not a good idea to Accounts Payable Services if you hand the whole process over to your provider and leave it at their discretion. Given their expertise, they should be able to keep everything in working order and fix any problems.
Your input is crucial in assisting accounts payable outsourcing services providers in identifying areas of success and failure. No one else but you understand all the nuanced workings of each supplier partnership. You risk losing track of crucial details and meaningful connections when you outsource a project.
Avoid it by carefully documenting your whole Accounts Payable Services before outsourcing. Your outsourced AP partner should be actively helping you achieve it before they take on any of the jobs.
2. Ignoring the importance of verifying the AP supplier
No one here is immune to that feeling since they’ve all been there. A person who seems good on paper and comes with glowing references convinces you to employ them, only to provide mediocre results.
There are a few more ways to avoid subpar service besides just completing your research:
- Get going with a small, time-bound pilot project.
- The vendor should only be involved in the AP process in the first phase.
- Let the Accounting Payable Process Service start with a manageable quantity of bills.
- The most important guideline is to have detailed accounts payable outsourcing services before commencing an engagement. Include details like expected processing times, response times, and dispute resolution procedures in your SLA.
3. Failure to set up parameters for interaction
When contacting a third-party service, you shouldn’t expect an immediate response.
However, payables may occasionally need urgent attention. Therefore, a lack of communication might slow your responses to AP problems or mistakes.
An Accounting Payable Process Service that outlines expected response times might be helpful here, but setting up regular meetings to discuss the AP procedure and voice concerns in advance could be more effective.
4. Financial records compromised
When you outsource accounts payable, you entrust a third party with your most private data, such as payment, tax return, vendor details, and behavior patterns. If any of the information is compromised, criminals might pretend to be you or one of your vendors, causing problems for your business.
To mitigate the threat, you should learn as much as possible about the data security practices of your outsourced AP service provider and the preventative measures they have put in place internally.
