Invoice management is a critical business activity, But, it is just as complex. Handling hundreds of invoices daily requires a significant amount of labor, time, and resources. But these same invoices increase cash flow and business performance.So, they must be carefully monitored and managed on time. Any incorrect or delayed payments will have a negative effect on the company’s reputation, credibility, and customer satisfaction.
To avoid such negative impacts, businesses are moving towards outsourcing invoice processing services. Outsourcing companies help the business to cut down on expenses, work with experts and decrease the payment cycle time. Additionally, outsourcing companies are well-equipped with the latest technology to provide instant results.
In this blog, we will discuss more benefits of invoice processing services and some things you should consider while hiring an outsourcing provider.
Different Accounts Payable (AP) Tasks To Outsource
When you outsource invoice processing, it doesn’t involve one task. You can hire a company that can outsource various tasks for your AP team. This helps the AP completely focus on other tasks like creating monthly reconciliation reports, making strategies for business improvements, and many more.
Here are some essential AP tasks that you can outsource:
- Document management
- Comparing received invoices to purchasing orders
- Processing purchase orders
- Building credit memos
- Accounts reconciliation
- Matching the purchase order, invoice, and receipt note (three-way matching).
- Processing electronic invoices
- Processing travel and other expenses.
- Batch creation
- Audit scanned invoices
When you outsource the complete list, you are outsourcing the entire invoicing process from receiving the invoice to reviewing, approving, and paying it. However, not all outsourcing companies perform every task. Select the specific task you wish to outsource, and then employ an outsourcing data processing company in accordance with those tasks.
Reasons To Outsource Invoice Processing
Here are some reasons why business houses are hiring third-party data processing services for their invoices.
- Cost Reduction
Cost savings is one of the main factors driving businesses to outsource their operations. The cost of hiring and overseeing an internal accounts payable team can be very expensive. They would require appropriate instruction, modern tools, and accessibility to cutting-edge technologies. However, by outsourcing, you may avoid the overhead costs of running a business and the human resource expenditures of preparing an AP personnel. You get access to expert AP specialists at a cheaper price as the third-party supplier already has all the required personnel and tools.
- Shorter Payment Cycle
Paying on time to the vendors is essential for business. With outsourcing invoice processes, you are also opting for data entry and conversion processes. This implies that regardless of their format, all of your invoices will be accessible to your staff quickly and effortlessly in a structured form. This will make it simpler for you to keep track of everything and pay on time. With a shorter payment cycle, you’ll get your accounts faster and your invoice process will run more smoothly. Ultimately, outsourcing will increase your cash flow and liquidity and prevent debts and piling of invoices.
- Prevents Errors & Mistakes
One simple mistake in spelling or number can cost you a lot. These mistakes lead to wrong or delayed payments, the creation of duplicate invoices, and a shortage of liquid cash. No business has time to deal with such issues instead of concentrating on other crucial business duties like expansion strategy. When you outsource your invoicing, you are giving the task to skilled professionals who know how to handle invoices with the highest accuracy and precision. They considerably reduce the chances of mistakes.
- Focus More on Core Objectives
As we know, the invoice process is a tedious task. By opting for outsourcing invoice providers, the employee can focus on more important work. Businesses can focus on more time to locate new clients, develop connections, and bring in revenue. Outsourcing gives you the satisfaction of knowing that you will get quicker and more accurate payments. Indirectly, It helps you to maintain your peace of mind and concentrate on other tasks.
- Promote Better Vendor Relationships
Nothing is more important than good quality goods and timely payment for a business. When you outsource your invoice process, you start to pay the vendors on time. This builds a sense of credibility and reliability in the vendor’s mind for your business and brand. With this satisfaction, the vendor puts their faith in your company and returns for further business. Additionally, they promote your business in the market through the word-of-mouth method.
- Better Security Control
The risks of fraud, duplicate payment, or information abuse are quite high when invoices are processed manually or through paper. By outsourcing, the company moves through digitalization and structured data. This helps the company to avoid any such fraud issues. Additionally, they can reduce the chance of non-compliance since they already have access to the most up-to-date security solutions. A strong outsourcing company can carry out thorough audits and simply and swiftly get rid of such concerns.
- Access To Specialists
Not all business houses have the same level of resources available to them. By outsourcing invoice processing, a business house can have access to the resources and specialists which were otherwise unavailable to them. This helps the business remain competitive in the market and meet all its business objectives.
Things You Need To Know Before Outsourcing Invoice Processing
Here are some points you need to consider before hiring any invoice processing outsourcing company.
Companies run from data and protecting this data is important. Most frequently, when you outsource a project, you will find yourself exchanging sensitive data and information with your outsourcing partner. Data handling errors may occur if this sensitive information is not appropriately maintained. A professional invoice processing company should have solid data encryption. Look for a company that has a good reputation and reviews in the market. The one on which you can put your trust. This will help protect your company’s data from leakage or breach. Additionally, sign a nondisclosure agreement with them. This will help you protect your data.
Whatever company you employ to handle your invoice processing, keep in mind that it needs to have a particular amount of expertise. Their experience will describe their efficiency. To know their experience level, schedule a one-to-one interview with them. Evaluate them on the basis of their:
- Set of abilities
- Technical proficiency
- Experience in tackling challenging problems
- Access to cutting-edge technology
One of the most ignored aspects is the budget. Try to hire an outsourcing company that offers more services at a lower price. Ideally, outsourcing should cost you less than
hiring in-house workers. Additionally, choose the option that best fits your budget by comparing the pricing that one firm offers to that of its competitors in the market.
The outsourcing company should be available around the clock to address your queries and issues. Proper communication helps the business develop a culture of trust and openness. The company should collaborate closely with workforce managers so that they can cascade your requirements quickly. Additionally, good communication will keep you informed of the status and make it simple for you to update your vendors.
When outsourcing, location is a crucial consideration. Consider if you would want to work with a nearby or far-off freelancer. There are several advantages to hiring local workers, even when freelancer fees may be lower in other nations. Local companies will provide greater cooperation and be more accessible for meetings.
Outsourcing invoice processing service can offer many benefits for the business. It will help your business maintain efficiency in its invoices while helping employees focus on another important task. It may also lessen human error and improve vendor relationships. These elements can help your business establish a solid reputation for dependability, enabling speedier growth.
Brown Walsh is a content analyst, currently associated with SunTec India- a leading multi-process IT outsourcing company. Over a ten-year-long career, Walsh has contributed to the success of startups, SMEs, and enterprises by creating informative and rich content around data-specific topics, like data annotation, data processing, and data mining services. Walsh also likes keeping up with the latest advancements and market trends and sharing the same with his readers.