Accounts Payable (AP) can be outsourced and it is highly beneficial in Small Business

Since Accounts payable and Accounts receivable are important process in financial accounting        so by carefully selecting the outsource provider small businesses can completely avoid all the risks associated with the accounts payable outsourcing and at the end they will gain all the benefits of accounts payable outsourcing.

Benefits of Outsourcing Accounts Payable

Outsourcing the account payable work can save lots of time of the manager as most of their precious time is consumed in overseeing the regular administrative work.  Proper infrastructure must be there fir this work. Moreover the HR has to find the right person with good qualification for the work. So it’s a long tedious work. Thus small companies have realized the benefits of small business accounts payable outsourcing. When small businesses outsource their accounts payable, they get relieved of the burden of doing the non-core works or oft repeated tasks. Following are some of the benefits of small business accounts payable outsourcing:

 1. Paying the invoices on the due date as per the company’s policies.

 2. See to the accuracy and the authenticity of the invoices that fall due and make a one to one co -relation of checks issued and invoices that receive payment

3.. Monthly, quarterly, half-yearly and annual reports are easily made available.

4. Tax related work is done without loss of man-hours at the company level and they all get ready on time for the CPA perusal.

5. Compliance to Sox is automatically carried out.

6. New improvements are incorporated immediately.

7. The company can demand the best service at the lowest cost from the provider.

8. When outsourced to India or other countries the cost of maintaining such accounts is much less compared to huge expenditure and capital needed for in-house department.

9. Any reference to any particular account can be assessed immediately and action taken.

10.Need for continuous training of personnel is avoided.

11. The expenditure connected to the provider will remain constant for a particular period of time since it of contractual nature.

12. The managers or CEOs of small business will have a clear picture of their liabilities and the nature of cash flow since the provider and details keep the account payable picture up-to-date are readily made available.

13. The managers or CEOs of small business can plan future plan-outlays with certainty.

Problem with Account Payable from the company

Now a days even with modern accounting software companies also cannot remove the pain of keeping track of increasing invoice and bills for all types of payment. It is not possible for the small business to keep a separate department for AP. This is highly expensive. . In these situations it is more economical for small businesses to outsource their accounts payable work

 

Small business accounts payable outsourcing have some risk

Outsourcing financial accounts payable even by small businesses has come to stay. Hence it is imperative to be aware of the risks involved in outsourcing any or all the accounts payable processes to an outside service provider. The understanding of the outsource service provider of the needs of the clients and the provider’s quality of service may affect the performance of the small business. Other factors like the legal implications; the company has to take on the responsibilities for all acts-inclusive that of the outsource provider. Combined with this the lack of knowledge of the modern developments in accounts payable processes on the part of the provider may add to the problems to the small businesses. The loss of control isanother risk that are faced by the small businesses. The outsource provider gets the information about the small businesses suppliers, cost, terms and conditions etc., this may be vital information for competitors