What is Accounts Payable?
Accounts payable is a critical business function, controlling cash and ensuring that vendors are appropriately managed to deliver effective services. The function is both transactional and strategic.
Critical control points include:
- Managing payment terms to ensure that all discounts are utilized within a contractual context.
- Working with vendors to get better payment terms (discounts for faster payment or extended terms to improve working capital).
- Executing transactional problem solving when a delivered quantity or service differs from a purchase order.
- Working with vendors on under- and overpayments to ensure accuracy and responsibility.
- Implementing effective cash flow management to avoid overspending and promote healthy business growth.
Why Offshore Accounts Payable Processes?
As described by Los Angeles-based finance and accounting consulting firm 8020 Consulting, the benefits of offshoring accounts payable processes are significant – especially when factoring the wage arbitrage offered by highly-educated but lower-income countries. This has the dual benefit of reducing the effective cost per transaction in accounts payable and typically improving the qualification level of the individuals performing the function.
In contrast, one of the potential issues the firm mentions is the time it takes to fully connect with an offshore partner. Typically, firms team with consultants or attempt find an offshore partner on their own. What makes Process-Smart unique is our full-employee integration in both the United States as well as offshore locations. Essentially, they are our global employees, which is a crucial differentiation that will protect your organization from the risk of receiving a “hand-off”.
As described in an 8020 Consulting article, communication can be rocky at first:
Your company’s managers and executives may be used to dealing with the same in-house senior manager to answer a variety of accounting/financial questions, for instance, while the new process will have them consulting with new personnel overseas. This can lead to frustration if you haven’t instituted strong change management within your organization.
The best way to smooth over these difficulties is to communicate with everyone before the transition and make sure they understand how their workflows will change. Provide them with liaisons that are both in-house as well as at the vendor to make the transition smoother. Selecting a finance and accounting outsourcing vendor that is in another country or time-zone requires creating buy-in among the teams who will be working with them.
Due to the unique advantages offered by Process-Smart, these issues are directly addressed. There is no liaison between the vendor and your company – we own it. This significantly reduces the friction points for implementation.
Proven Benefits of Offshoring
A recent article authored by Matchboard Managing Director Sharon Melamed highlights functions (including accounting) that directly benefit from offshoring. These include:
Large Cost Savings
- Depending on which country you outsource to, you will be able to experience cost savings between 30-70%.
Broader Talent Pool
- If you are struggling to find the right skillset locally, you can tap into the world’s vast English-speaking labor pool to accommodate needs.
Relieved Administrative Burden
- Spend more time nurturing customer relationships and developing your business strategy while not having to attend to daily tasks.
Increased Flexibility
- Offshore workforces can be ramped up-and-down in accordance with your changing business needs, with no investment in computers, phones or other assets. You can be up-and-running in as little as a couple of weeks.
Process-Smart is your key partner for identifying, analyzing, and developing strategies to increase your company’s capabilities. Check out our case studies. We have tackled opportunities in:
- Accounts Payable
- ERP system entry
- Informational/Photo audits
- Report/Back office information generation
- Shipping and Tracking Information Hubs
Ready to Connect with Process-Smart?
We’re here to help you reach your goals – whenever you need us. To learn more about Process-Smart and how we can maximize your business, please complete the following form or just send us an email. One of our experts will contact you directly to discuss your company’s current needs