Accounts payable (AP) and accounts receivable (AR) services are the critical elements to an adequate cash flow management. Both AR and AP assist each other in analyzing financial records and data to give complete visibility to the financial status of a business.
However, there are volumes of complexities in the transactions; both of these functions are quite difficult to manage. Adequate resources and automation processes often compound the challenge.
Businesses still massively rely on manual and paper processes that can lead to inefficiencies and tremendous human errors. Even though business owners and other stakeholders see that these kinds of operations do not generate a company’s revenue, but these non-revenue activities and duties can significantly affect the business if these processes are neglected.
So, should a company invest in trending AP and AR processes? Or outsourced both AP and AR to an experienced third-party vendor?
Investing or hiring in-house AP and AR processes can add additional expenses with no guaranteed outcome and absolute terms that can enhance the business operational efficiency. Also, on the other hand, according to many surveys and studies, companies that chose to outsource both AP and AR were able to solve and process financial transactions up to 59% faster compared to businesses that want to invest in AP and AR prices through in-house.
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Optimized Operational Cost
Creating an in-house AP and AR infrastructure is an additional way to be more costly compared to outsourcing. Investment in staff, infrastructure, office supplies, office equipment, and training can be quite expensive. Also, other expenses are linked with in-house AP and AR processes, which are human resources.
Outsourcing, on the other hand, assists businesses to convert these expenses into a more variable cost by allowing organizations to leverage as per the company’s requirements. Often, outsourcing firms can limit the headcount base on the business necessities.
Partnering with an experienced and reliable third-party vendor, businesses can get access to a complete infrastructure with the latest and best technology, and skilled personnel equipped to handle multiple and several accounting duties while reducing the time and cost substantially.
Though savings may vary depending on the volume of your business financial transactions and size of the company, many businesses have been able to save up to 50% in substantial yearly savings.
Boost Process Efficiency
The most notable advantages in outsourcing AP and AR process is the considerable enhancement in the business operational efficiency, which is often a difficult and perhaps impossible to be achieved by in-house AP and AR.
Outsourcing contracts are bound to be defined in SLAs (Service Legal Agreements), which is one of the essential factors in every efficient delivery. A well-established SLA can make sure that the following strategies and practices to deliver result expectation.
Besides, the experienced and reliable third-party vendors used concreted process management tools and software to continuously enhance their performance when it comes to deadline, expense, work quality, and error rate.
Experienced and highly-skilled staff is trained and fully-knowledgeable in managing multiple processes with flexibility and giving better service to both end customers and suppliers.