When it comes to automating accounts payable, businesses have a few options: they can outsource the entire process, automate part of it, or keep the process in-house. Each option has its own set of pros and cons, and there is no one-size-fits-all answer.
In this blog post, we will explore the pros and cons of automating accounts payable vs outsourcing. We will also look at some scenarios where each option is more advantageous. Keep in mind that these are just general guidelines – every business is different, and you should make a decision based on your specific needs and goals.
Is AP Automation Software Supplanting AP Outsourcing?
In recent years, automating accounts payable has become a popular option for businesses due to the improved business efficiency and cost savings compared to outsourcing. Automation technologies are designed to streamline processes, reduce manual data entry errors, and eliminate duplicate invoices. In addition, automating AP can provide real-time insights into cash flow and spend visibility.
In addition, automating AP can provide real-time insights into cash flow and spend visibility.
However, automating certain processes may not be the best solution for every business. For example, if a company deals with a high volume of complex invoices, automating AP may not be enough to save time and money. In this case, outsourcing may be the better option.
Pros and Cons of Accounts Payable Outsourcing
Outsourcing accounts payable can be a great way to reduce costs while maintaining accuracy and efficiency. Outsourcing AP allows businesses to focus their resources on core activities, while the external provider handles all of the invoicing, reconciliation, and payment processing.
However, payable outsourcing services also carry certain drawbacks. One of these is that businesses may not have as much control over the process, and there may be additional fees associated with outsourcing AP. Additionally, businesses must make sure they are working with a reputable provider who can handle sensitive financial data securely.
AP Outsourcing vs. AP Automation
When it comes to automating accounts payable vs outsourcing, the decision ultimately depends on the business’s specific needs. Let’s take a look at a few scenarios to determine when automating or outsourcing is the better option.
Scenarios That Favor Outsourcing:
Outsourcing AP is often the best choice for businesses dealing with complex invoices or a high volume of invoices regularly. This is because outsourcing allows these businesses to free up resources and focus them elsewhere, while still ensuring accuracy and efficiency in the accounts payable process.
Additionally, outsourcing can be quickly scaled up or down depending on the business’s needs. If your business has lofty goals to scale AP operations, then outsourcing will empower you to do so without having to hire new employees or purchase and implement technology.
Scenarios That Favor AP Automation Software:
Automating accounts payable is often the best choice for businesses looking to improve efficiency in AP operations. Automation software can drastically reduce manual data entry errors, eliminate duplicate invoices and provide real-time insights into cash flow and spend visibility. Additionally, automating AP allows businesses to eliminate any paper processes that could be slowing down their operations.
Businesses that have in-house teams with the right skills and resources may find automating AP much more cost-effective than outsourcing because the cost per invoice processed is significantly lower. Automation software also provides a high level of accuracy and control, as businesses can customize their automation to fit their specific needs. Furthermore, automating AP is ideal for businesses that need real-time insights into cash flow and spend visibility.
When is a Hybrid Approach Right for Your Business?
Sometimes automating or outsourcing AP isn’t the only option. A hybrid approach is often a favorable solution as it allows businesses to benefit from both automating and outsourcing. For example, a business could use an automation system as a single source of truth to manage data movement between outsourcing partners while automating standard processes in-house.
Ultimately, automating or outsourcing AP will depend on the type of business and its specific needs. Automation technologies can reduce processing costs, labor costs, and late payment fees because the software checks for duplicate invoices and errors in invoices. Conversely, businesses dealing with a high volume of incoming invoices may find outsourcing the smarter choice to manage the invoice processing workflow.
Whether you choose, automating or outsourcing AP can help save time and money while creating more efficient processes. A trusted partner like Mosaic can provide guidance in terms of automating vs outsourcing accounts payable for your AP operations. Our digital transformation consultants will work with you to identify the best solution for your business and create a tailored plan to help you achieve your goals.
Contact us today to schedule a meeting with one of our AP consultants.