What is accounts payable outsourcing
Accounts payable outsourcing is the process of hiring an external firm or individual to handle a company’s accounts payable functions. Accounts payable, also known as “AP,” refers to the money a company owes to its vendors and suppliers for goods and services purchased on credit. Outsourcing AP functions can be a cost-effective and efficient way for companies to manage their finances and stay compliant with legal and financial regulations.
When a company outsources its AP functions, the outsourcing vendor takes on the responsibility of managing the company’s accounts payable process. This includes tasks such as recording, verifying, and paying invoices, as well as preparing and reporting on financial statements. The client and outsourcing vendor coordinate to ensure that all AP functions are handled in an efficient and timely manner.
The process of outsourcing AP functions typically begins with the client providing the vendor with access to their financial records and systems. This includes providing the vendor with access to accounting software and other financial tools, such as invoicing and payment systems. The vendor then uses this information to record, verify, and pay invoices, as well as prepare and report on financial statements.
The vendor also uses specialized accounting software to process the AP functions. These software can include accounting software like QuickBooks, Xero, and SAP, as well as AP automation software, like Chrome River, Bill.com and Invoicely, which streamlines the invoice processing, approvals, and payments.
The client is responsible for providing the vendor with all necessary information and documentation, including invoices, purchase orders, and other financial records. The vendor then uses this information to record and verify invoices, as well as prepare and report on financial statements. The client also has access to their financial records and can review them at any time.
In summary, accounts payable outsourcing is the process of hiring an external firm or individual to handle a company’s accounts payable functions. It can be a cost-effective and efficient way for companies to manage their finances and stay compliant with legal and financial regulations. The client and outsourcing vendor coordinate to ensure that all AP functions are handled in an efficient and timely manner. Specialized accounting software is used to process the AP functions and streamlined the process of invoice approvals and payments.
