Ironically, the phrase “To save money you have to spend money” is accepted as an axiom.
Based on the concept of "return on investment" for years companies have invested huge amounts of money on the latest and most efficient technologies with the expectation of maximizing profit, only to be disappointed in the long run.
Policies based on outsourcing are based on financial strategies transforming CAPEX into OPEX strategies.
In particular, when we talk about outsourcing accounts payable or invoicing clients, the most important difference versus traditional internal processing is the lack of initial costs, and operating costs become variable, ie a cost per transaction or document processed.
Value of AP and AR outsourcing
When the value of outsourcing AP and / or AR processes are analysed, it is common to consider only the savings that will be achieved by outsourcing the process, in any case already highly compelling. But aside from the quantitative arguments there are further advantages and benefits are achieved which are qualitative:
- - Have a turnkey process where there is a clear responsibility of who results can be demand.
- – Provide new useful and necessary services to optimize supplier and/or customer management.
- - Encourage the dynamic tracking of exceptions covered by the functionality of electronic approvals.
- - Get a reduction in exception resolution times of up to 70%.
- - Benefit from a variable cost that provides deep flexibility for the company to be managed without worrying about the time of year, accelerated growth or adverse times.
- - Possibility to re-assigndepartment staff to more important and strategic functions, dramatically decreasing rotation.
Thus, apart from the impact on "the bottom line" of quantitative benefits, these qualitative arguments lead to a substantial improvement in the satisfaction of internal users, customers and suppliers, reinvigorating the image of the Finance Department.
Outsourcing Models for AP and AR
There are many elements to consider when it comes to choosing the optimal outsourcing model for AP and AR. Following are six of them:
- -Technology, it is important to understand which technology to implement, how it is used and interfaces with the company's own systems.
- - Process, the current process will continue or a new process will be implemented meet to the needs of the company?
- -Personnel , what personnel will participate in the outsourced process?
- - Value, what is the value received from outsourcing?
- - Implementation, how difficult will the transition to outsourcing from an internal process be?
- - Cost, can the outsourcing provider make the process cheaper?
There are different outsourcing models with different weights for each of the variables. They are:
- - Cosmetic: in this agreement a service supply company acquires the obligation to contract client company's employees, who then continue to operate the service. This model is the least attractive within different types of outsourcing. Usually chosen when immediate improvements in personnel costs are required for the balance sheet but does not reduce costs nor improve productivity.
- - Transitional: a service provider uses the existing systems of the client company to perform the work with these systems but with external staff in the offices of the client company. Due to training costs, the provider cannot run the service more cheaply than done by current staff. This is a proposal of little value because it does not reduce costs significantly nor help achieve strategic value.
- - Rigid: this is the most complicated approach. The company wants the benefits of outsourcing but does not consider changing its process. The paradigm is to use new technology and new employees but not make changes to an inefficient process. This is the worst of all situations and does not facilitate relations between customer and supplier.
- - Integral: In this scenario the client company delegates the responsibility of the process to the service provider. The company maintains control, but the day to day operation and technological tasks are performed by the service provider. This model is the one that brings more value to the customer, produces greater savings and facilitates the relationship between the supplier and the customer.
In summary…
Outsourcing of AP and AR contains the basic ingredients to sustain a leading business competitivity such as:
AP and AR outsourcing contains the fundamental ingredients that underpin leading business competitiveness, such as:
- - Cost reduction,
- - The continuing evolution of processes and
- - Strengtheningthe company focus on truly strategic activities.
easyAP proposes a specific gradual and constant evolution of AP and AR processes to levels of excellence. Ensuring a balance between technology and labor that results in satisfaction of customers, suppliers and internal users.
easyAP proposes a specific gradual and constant evolution of AP and AR processes to levels of excellence. Ensuring a balance between technology and labor that results in satisfaction of customers, suppliers and internal users.
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