Accounts Payable Outsourcing with All of the Pros and None of the Cons
Businesses are always looking for ways to maximize profit and reduce costs. Since 1989, outsourcing has become one of the best solutions for getting jobs done not only efficiently but also cost-effectively, helping businesses take productivity to new heights. One of the most common and critical of these practices is accounts payable outsourcing.
However, some businesses have found that outsourcing their accounts payable had caused a lot of problems for them. Communication problems, lost invoices, and audit errors are some of the issues discovered. Why did things go wrong? How can you avoid making the same mistakes? AwesomeOutsourcing is here to provide you with a solution.
Accounts Payable Meaning
Webster’s New Universal Unabridged Dictionary defines accounts payable as: “a liability to a creditor, carried on open account, usually for purchases of goods and services.”
You could say that “accounts payable” is simply a fancy term for money owed when buying goods on credit. If a company orders supplies from its suppliers, they would incur a short-term IOU that they need to pay on time to avoid getting defaulted. In business terms, this is referred to as accounts payable or AP. This is used to keep track of money owed, to whom, and when you have to pay it.
This is one of those bookkeeping tasks best done by someone else to free you up to concentrate on running your business. There are plenty of outsourcing firms that provide accounts payable services, but we are here to provide you with a better option.
Before that though, let’s take a look at why you would want to outsource.
Benefits of Accounts Payable Outsourcing
Outsourcing helps your business achieve its potential because of these factors:
- Saves Time – Dealing with staggering amounts of invoices eats up a lot of your time. Outsourcing gives you enough time to run your business the way it is meant to. Why waste your time on bookkeeping when you already have enough trouble delivering on your business’s promises? It will also give you more free time to spend with your friends and family.
- Reduce Expenses – Hiring a well-equipped accounts payable staff in your own country can increase your company’s expenses exponentially. Offshore outsourcing will allow you to find individuals who will do the same job with the same quality at a much lower cost.
- Avoid Mistakes – Doing AP on top of your other business activities can lead to distraction and eventually errors. An outsourced worker knowledgeable about accounting can ensure that all of your bookkeeping is in order while you concentrate on the other things in your business that you need to get done.
- 24 Hours Productivity – An outsourced worker can live on the other side of the world from you. This means that while you sleep, your business is still running and when you wake up all of your bookkeeping will be complete.
- Peace of Mind – Knowing that all of the benefits listed above are in place; you are no longer behind on your accounts; you are now able to use your time on more productive tasks, and that someone is taking care of your invoices, will greatly reduce your stress and headaches. Now you can relax knowing that your company is up to date.
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Problems of Accounts Payable Outsourcing
If those benefits sound good to you and you are ready to find a BPO firm to handle your accounts payable, hold on for just a minute, because these problems might happen to you:
- Misplaced Invoices – Sometimes, you need to find an invoice and you discover that you can’t find it anywhere. You call the firm you outsourced, and they tell you they’ll look for it. However, you need it now, but the firm is busy helping others since you are not their only client. You will have to wait… and that can turn rapidly into a nightmare.
- Harder to Pin-Point Problems – If something goes wrong, you may not know what happened. It’s increasingly difficult to identify an error when it happened in a different country, a different company, and among people you don’t know.
- You Put Yourself at Risk – If the company you outsourced your accounts payable to goes bankrupt, or their security is compromised, then you and your business accounts could be at risk.
- Loss of Control – Letting a third-party company handle your accounts means you will be giving up control over how it is handled. Unexpected issues could arise and you might find that there’s not much you can do.
- Increase in Prices – The most popular outsourcing destination is India, and India’s wages are on the rise. This is good for them but bad for you. Outsourcing firms could increase their prices for whatever reason and you may start to see unexpected losses in your budget.
- More Expensive than Outsourcing Directly – Okay, spoiler alert, we think you’d be better off hiring your own outsourced worker directly rather than contracting a BPO firm. It’s much cheaper and gives you more control.
To be fair, these problems can be avoided by choosing the right outsourcing firm, one that you can trust.
There are many outsourcing firms out there that value their clients and ensure that your dealings with them are as smooth as possible. However, you still can’t beat the less expensive option of outsourcing directly.
How to Beat the Problems Involved in Accounts Payable Outsourcing
If you have been reading everything thus far, then you already have an idea where we are going here.
The solution to your problems: Outsource directly to the Philippines!
Instead of entrusting your accounts to another company, you can simply hire an accountant or a virtual assistant yourself. Doing this will allow you to enjoy the best of both worlds by having an employee that you can supervise and also allowing you to cut costs by outsourcing offshore.
Why the Philippines? Because the Philippines has an English-speaking population of 63.73%, higher than other popular outsourcing countries like India (12.18%), China (less than 1%), Thailand (27.16%), Brazil (5%), or Poland (37%). Plus, because of the low cost of living, you can hire a Filipino online employee for as little as $2 an hour.
It can be argued that outsourcing to South-East Asia might be cheaper, but outsourcing to Eastern Europe would make communications easier. However, this does not apply to the Philippines, where English is an official language, obviating the disadvantages of other Asian countries.
The Philippines is very westernized and is highly attuned to American culture. There are never any serious communication issues when working with a Filipino.
Advantages of Accounts Payable Outsourcing to the Philippines Directly
Aside from all the existing benefits listed above, outsourcing directly to the Philippines can give you the additional benefits:
- More Control – Having an online employee means you can supervise and control your bookkeeping easier. It’s just like having someone in-house except you communicate through the computer and it’s less expensive.
- Problems Are Easily Resolved – If something happens, you can easily fix it between yourself and your online accountant or virtual assistant. You don’t have to deal with company spokespeople who give you empty assurances or vague answers.
- Easier Communication – Communicating with an online employee is as easy as talking to someone face-to-face except you talk through the computer. An outsourcing firm has its own workers that you don’t know and can’t reach. Having an online employee means you can place a name and a face to the person handling your accounts. Discussions will be smoother and have less room for misunderstandings.
- Better Investment – When they start to become comfortable in your business, Filipinos would stay with you for as long as they can rather than move on to another job. Most Filipinos love stable income. Some would even turn down more high-paying jobs because they prefer to stay with someone they are familiar with.
- Your Own Personal Accountant – There are many CPAs in the Philippines familiar with international accounting practices. This way you can hire someone to handle your accounts at a much lesser cost than hiring someone in your own country.
- Do More Than Just Accounts Payable – If you hire a virtual assistant who is also a CPA, then you will have someone to perform other tasks for your business like data entry, internet research, and whatever needs your business have.
- Reduce Expenses Even More – Outsourcing firms cost as low as $8 an hour. That sounds attractive until you hear that Filipino online employees can cost even lower at around $2 an hour. It’s cheaper and comes with all the extra benefits listed above.
You can find thousands of Filipino accountants and virtual assistants over at Onlinejobs.ph with varying levels of experience. You can register for the monthly fee of $69, find the employee you are looking for, and cancel your subscription when you are satisfied with the employee you have hired.
Too Good to Be True?
We are not going to pretend that outsourcing to the Philippines is absolutely problem-free, nothing is. However, if you familiarize yourself with Filipinos and know what to expect, then you can pre-empt issues that might occur.
You might also need to invest time in training them and acclimatizing them to your business. Plus, you’re going to have to start giving them raises when they deserve it (they’re not robots).
Spending a little time getting to know them and training them is a very small price to pay for all the benefits that they can provide for your business. We think it’s worth it. Outsourcing to the Philippines is one of those smart business decisions that is rarely talked about and could be the key to elevating your business to the stature you’ve always dreamed for it.
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