Most people don’t launch a business thinking about invoice processing. And yet, if you don’t handle your accounts payable (AP) properly, the business you do care about starts to fall apart.
Vendors get frustrated, late fees pile up, and your cash flow starts looking like a bad game of Tetris. So, like many companies today, you start wondering: Should we outsource this?
Outsourcing accounts payable helps you get clarity. When you partner with the right provider, the goal isn’t to replace your team. It’s to free them up. To make sure payments are accurate, on time, and trackable without the spreadsheet nightmares.
A recent Ardent Partners report revealed that 49.7% of AP processeswere still too manual. That means too many people and businesses (almost half) are stillchasing paper trails when they could be focused on strategy.
So, if accounts payable feels more like a burden than a process, it’s time to rethink how you manage it. Let’s unpack the pros and cons of outsourcing accounts payable and see if it might just be the relief your business has been looking for.
Table of Contents
- What is Accounts Payable Outsourcing?
- Why Businesses Seek Accounts Payable Support
- Benefits of Outsourcing Accounts Payable
- Potential Drawbacks of Outsourcing Accounts Payable
- Signs Your Business Should Be Outsourcing Accounts Payable Processes
- Accounts Payable Outsourcing vs Accounts Payable Automation
- Partner with a Trusted Accounts Payable Outsourcing Provider
- FAQs
What is Accounts Payable Outsourcing?
Accounts payable (AP) outsourcingsimply means contracting out your invoice processing, vendor payments, and other related accounts payable functions to a third-party provider. This means you partner with an external companythat offers or specialises in this area instead of DIY-ing it in-house.
Outsourcing AP lets providers manage all or part of your AP workflow, often using their own technology and expertise to guarantee accuracy, efficiency, and compliance.
The scope of services can vary, with some businesses outsourcing the entire AP process and others choosing to outsource specific tasks.
Why Businesses Seek Accounts Payable Support
Companies don’t wake up one day and decide to outsource AP. They do it because something’s not working, and it’s usually more than one thing:
Lack of Clarity
If you’re always guessing which invoices are pending or how much cash is going out next week, you have a visibility problem. Without clear data, managing budgets and forecasting becomes a guessing game.
Outsourcing gives you real-time access to dashboards and reports. That means no more scrambling before board meetings.
Poor Vendor Management
Vendors remember when you pay late, and not in a good way. Delays damage relationships and cost you negotiating power.
An outsourcing provider keeps payments timely and communications consistent. That helps you build trust and avoid awkward conversations.
Payment Processing Costs Too Much
Manually processing invoices takes time and money. Adobe shared that the average cost to process a single invoice manually in-house could be around US$10, to even as much as $40.
With outsourcing and automation, that number can drop significantly. That’s real money saved over hundreds, or thousands, of invoices.
Frequent Errors and Duplicates
Human error creeps in when your team is overwhelmed. Double payments, missed invoices, and mismatched data create expensive headaches.
Outsourced AP providers use quality control checks to catch these before they go out the door. That means fewer corrections, fewer apologies, and more confidence in your books.
Your Team is Stretched Thin
If your finance team is buried under paperwork, they can’t focus on strategic goals. Outsourcing takes repetitive tasks off their plate. That lets them spend time on forecasting, vendor strategy, or performance reviews instead of chasing signatures.
5 Advantages of Outsourcing Accounts Payable
Outsourcing works bestwhen it solves more problems than it creates. And for accounts payable, that bar isn’t hard to clear:
1. Lower Costs
You’re not paying full-time salaries or renting extra office space just to manage invoices. You’re also not wasting time fixing errors or mailing out cheques. It all adds up, and suddenly you’ve got budget room for the things that grow your business.
2. Faster Turnaround
When your AP system moves quickly, everything else does too. Vendors get paid on time, your books stay up to date, and you stop missing those early payment discounts. It’s the difference between always playing catch-up and getting ahead.
3. Better Compliance
Regulations change all the time. A solid outsourcing partner keeps track of that and makes sure your audit trail is clean and complete. This means you’re not scrambling during tax season.
4. Improved Accuracy
Mistakes in doing AP processes cost money. Outsourcing reduces human error by leaning on consistent processes and automation.
Your reports get cleaner, and you stop having to explain the same invoice twice.
5. Scalability
Business growth shouldn’t mean spreadsheet chaos. Outsourcing gives you the flexibility to handle spikes in volume without overloading your team. You don’t have to hire, train, or onboard every time things get busy.
Potential Drawbacks of Outsourcing Accounts Payable
Even good ideas come with trade-offs, and outsourcing is no different:
Loss of Control
Handing off payments to someone else means giving up a little daily oversight. That can be hard at first, but good providers balance it out with real-time dashboards and clear reports. You still see what’s happening, you’re just not the one doing the clicking.
Onboarding Time
Transitions take effort, no getting around it. But once the system is in place, your team gets time back to focus on finance instead of firefighting. It’s a short-term hassle for long-term relief.
Vendor Resistance
Not every supplier will be thrilled about a new contact. Change feels personal when money’s involved. But being upfront, giving context, and showing that nothing’s slipping through the cracks can help them adjust.
Data Security
We know that sharing financial data is nerve-wracking. That’s why you want a provider who doesn’t just say they’re secure but can prove it with compliance badges, encryption protocols, and regular audits. ISO 27001-certifiedis the bare minimum.
Signs Your Business Should Be Outsourcing Accounts Payable Processes
There are several telltale signs that your business could benefit from outsourcing accounts payable:
- You’re missing invoice deadlines more than once a month.
- Your AP team is constantly working overtime.
- You have no standardised system for approving or tracking invoices.
- Your audits take forever because records are incomplete or inconsistent.
- You’re growing faster than your finance department can handle.
- Vendor relationships are strained due to payment issues.
- The cost of your in-house AP processing seems to be constantly rising.
If any of these sound familiar, you might be ready for a change in how you handle your AP.
Accounts Payable Outsourcing vs Accounts Payable Automation
It’s important to distinguish between outsourcing AP and simply automating your in-house AP processes.
Automation involves using software to streamline tasks like data entry, invoice matching, and payment processing within your existing team. And like we’ve mentioned, outsourcing involves handing over these tasks entirely to an external provider.
Accounts payable invoice automation (APIA)solutions can certainly improve efficiency and reduce errors, but they still require your internal team to manage the overall process. Outsourcing transfers the responsibility for the entire workflow to specialists.
The best choice depends on your specific needs, resources, and strategic goals. You can even find reliable providers that often combine both. You get a team anda system, working together to speed things up and keep costs down.
Partner with a Trusted Accounts Payable Outsourcing Provider
Outsourcing only works if you trust your provider. Look for partners who offer:
- Transparent pricing
- Real-time reporting
- Proven experience in your industry
- Secure systems and compliance credentials
Start with a conversation, not a contract. Ask how they’ll support your goals and what they’ll need from your team. A good provider will answer your questions, andthey’ll ask the right ones.
Outsourcing your AP doesn’t have to be a dramatic shift. It can be a quiet, steady change that makes everything else run smoother. Kind of like switching to direct debit and wondering why you didn’t do it five years earlier.
FAQs
Is outsourcing accounts payable expensive?
It can lead to cost savings in many cases by reducing the need for additional staff, lowering error rates, and improving efficiency. In fact, outsourcing lets you slash up to 70% off your business spending.
But generally, the cost will depend on the volume of invoices and the scope of services you require.
How secure is it to outsource accounts payable?
Reputable AP outsourcing providers have stringent security protocols in place to protect your financial data. They often use access controls, encryption, and regular security audits. It’s crucial to vet their security measures thoroughly before partnering with them.
What size of business typically outsources accounts payable?
Businesses of all sizes can benefit from AP outsourcing. Small businesses can gain access to expertise they might not have in-house, while larger organisations can streamline high-volume processing and free up their finance teams for more strategic initiatives.