Think it might be time to outsource your accounts payable? Organizations can struggle with a myriad of issues related to their accounting departments, but issues within accounts payable can be especially damaging and costly. If any of the examples highlighted below apply to your company, it’s time to start looking into your outsourcing options.
It’s often said that it costs $1 to verify the accuracy of data right after it’s entered, but by the time an error reaches the batch form, it’s $10 to clean it up. If it isn’t caught, the cost rises to $100 or more. This is a generalization, but errors are expensive. They can cause your company to overpay, underpay, pay late, and a million other things. Moreover, if you’re using spreadsheets to track, chances are yours have “significant errors” too—88 percent of them do.
This is where data capture software and having a well-trained team prove invaluable—they eliminate costly human errors. However, purchasing the equipment is an investment, and reengineering processes require a unique skill set, which can put the upgrade out of reach. Although not all outsourcing companies leverage this kind of tech, DATAMARK has been perfecting processes with it for decades.
Sometimes large businesses fail to shed their small business behaviors when they grow. For example, suppose a small business has an accounts payable person who uses his or her own methodology and processes. In that case, it’s not a huge deal because there’s only one person handling the accounts payable. However, when the organization grows, and multiple people are applying their own methodology and finding “shortcuts,” mayhem ensues. Even companies with written processes can struggle with this, and as team members are stretched thin due to company growth, it can become impossible to know where anything is at without going person to person and asking.
Outsourcing companies create streamlined processes, so it’s always easy to know exactly where an item is in processing. Bottlenecks and errors reduce too.
The aforementioned issues set the stage for slow payments. Sometimes, payments are made late or not paid at all. This increases expenses due to late fees causes strain on vendors, and can even cause vendors to stop serving your company.
When you use accounts payable outsourcing services, you can avoid these hassles and expenses and operate in total confidence that nothing is being overlooked.
Did the mailroom lose the invoice? Did it land on someone’s desk? Did a person going on vacation forget to forward it to the next person in line? Finding the culprit is never easy and chasing down the weak link is costly. Paperless systems are not immune, particularly when they rely on hand-keyed and potentially error-riddled entries.
Whether you’ve outright lost invoices, misplaced them temporarily, or simply cannot find them on your computer, costs skyrocket, and relationships sour. Effective outsourcing companies have the processes in place to ensure the information you need is just a click away.
The average office employee now generates 10,000 sheets of paper per year, with American businesses using one trillion pieces on average. The figure jumps to 1.6 trillion when you include things like invoices and statements. That takes up a whole lot of space (three feet for the average employee and a pile that reaches halfway to the moon if combined) and is costly. Case in point, when the U.S. Securities and Exchange Commission (SEC) decided to go paperless, the agency realized $1.5 billion would be saved in a decade.
While most companies see the benefit of going paperless, getting there is another story. It requires updating tech and creating new processes, things that may traditionally be quite challenging but are easy when you have an experienced outsourcing company tackling it for you.
Fraudulent invoicing happens, and if you don’t have the protocols in place to ensure double-billing, false billing, and other types of fraud aren’t occurring, your organization could be hemorrhaging money. Security is another chief concern, and data breaches can occur at any stage in the chain.
These are concerns your organization can’t afford to bet on. You either need a dedicated and experienced fraud and security team, or you need to partner with an organization that can provide these services for you.
Approval cycles are essential when it comes to managing orders, but all too often, receipts and purchase orders have to pass through several people before getting the green light. This method can delay payments, demoralize employees, irritate vendors, and increase costs.
There may be no way to get around having an approval process, but at a bare minimum, the workflow can be digitized, making it easy to see exactly where something is in the process, who still needs to check off on it, and speed things up. Best of all, some outsourcing companies create custom solutions that offer all these benefits but will still allow you to have the level of oversight you need.
What would happen if your server crashed, your storage room flooded, or a massive snowstorm prevented employees from processing your accounts payable for a week? If a single adverse event could wipe out operations, even for a short period of time, you need to enhance your business continuity planning. Your accounts payable outsourcing company can help with that.
If things have gotten so bad that you can’t make heads or tails of your ledgers, or you know they’re packed full of errors but haven’t been able to address them, it’s time to bring in expert support.
Maybe you’re stretched too thin to start picking apart processes and improving them. Your organization doesn’t have the means to purchase tech, or you simply don’t have someone on staff with the experience necessary to address the issues your accounts payable department is facing. In any case, an outsourcing company can help you get things on track quickly.
DATAMARK, a trusted Contact Center and Business Process Outsourcing provider of Fortune 500 companies for three decades, can help you eliminate bottlenecks, reduce errors, work with greater efficiency, and operate more profitably. Read more about our accounts payable services or contact us for details.