Is Accounts Payable Outsourcing the Best Choice for Your Business?

Accounts payable outsourcing lets teams offload repetitive AP processes and focus on higher-value tasks. Find out if it’s right for your organization.
Written by:  Allison Reich
Last Updated:  February 11, 2025
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In its simplest form, accounts payable outsourcing transfers tasks and responsibilities to an external company for efficient management. While outsourcing accounts payable (AP) processes are popular, the practice comes with challenges alongside its benefits.

Alternatives like accounts payable automation use business intelligence software to manage in-house processes. Automation has several advantages over outsourcing, including cost savings, consistent 24/7 operations, and decreased third-party risk. As with accounts payable outsourcing, an AP automation solution frees time spent on repetitive and time-consuming manual processes like invoice data capture, three-way matching, and payment processing so team members can focus on more strategic work. 

Understanding the differences between a third-party AP outsourcing provider and AP automation as well as why a software-based solution may be a better way to streamline the accounts payable process can help you save time and maintain control over spend. 

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Why do companies outsource accounts payable?

If your business currently makes do using paper invoicing and optical character recognition (OCR) to manage its AP workflows, you already know the challenges inherent in outdated systems. 

Still, deciding if you should outsource isn't necessarily easy, as business needs, AP volume, and the structure of current business processes can vary widely. Consider the following pros and cons when exploring accounts payable outsourcing services. 

Pros

Cost and time savings: Outsourcing AP tasks can save your company considerable money and time, especially compared to increasing headcount. According to recent reports, hiring one employee costs an average of $4,700, and executive hiring expenses can climb even higher. Internal invoice processing costs are another consideration, as manual invoicing can cost as much as $15 per invoice. Outsourcing and automation may offer up to a sixfold reduction in processing costs.

Improved efficiency: Not only are manual trade accounts payable processes prone to data entry errors, how quickly each invoice is processed is limited by your AP department's abilities and work hours. Accounts payable outsourcing companies and software can increase efficiency and eliminate manual data entry errors.  

Access to better tools: Third-party accounts payable services provide professional teams and the latest software, offering increased access to accounting functions like customized invoicing and expense management.

Increased profitability: AP outsourcing solutions implement efficient systems that allow you to pay supplier invoices on time (or even early), enhancing vendor relationships and unlocking early payment discounts that improve cash flow and increase profitability.  

financial audit checklist
Tool

Financial Audit Preparation Checklist

Financial audits gives companies an objective read of their financial statements. Use this checklist to get started.

Download the tool

Cons

Lack of process control: With outsourcing, it’s difficult to control how the outsourcing team handles your accounts or runs back-office processes. 

Reporting issues: In AP services outsourcing, error reporting can be slow or missed. Even serious issues—such as duplicate payments, exception processing, and payment fraud—may be overlooked.

Third-party risks: Dependence on third-party providers introduces risk. Sharing sensitive information can introduce gaps in your business rules and data security. If a third-party company experiences mismanagement or bankruptcy, it may disrupt your accounting services. 

When evaluating possible outsourcing service providers, it can be helpful to answer the following questions:

  • Does your company have enough internal support to make the switch? The move to outsourcing requires internal stakeholders to champion the project and take it to completion. It also requires buy-in from your finance and executive teams.
  • Could the increased efficiency of outsourcing help internally? Outsourcing allows you to focus on core operations while freeing up resources for other business functions. 
  • Will outsourcing improve operational costs? Conduct a cost analysis to determine if outsourcing your accounting system processes could improve efficiency and reduce operational expenses.
  • Are there alternatives to AP outsourcing that could work? When considering a major change to your processes, it helps to explore all your options. Alternatives like AP automation can provide the efficiency and visibility of outsourcing while allowing your company to maintain control of its processes. 

Consider AP automation as an alternative to outsourcing

Upgrading outdated accounting processes using modern tools requires upfront effort and expense, but improved outcomes make the switch well worth it. Implementing automated accounts payable software may be a cost-effective and reliable way to solve workflow issues within your AP function. Automation offers many benefits of outsourcing accounts payable without the liabilities of engaging a third-party AP team. 

By incorporating AP automation software solutions, businesses can: 

  • Improve internal processes without increasing or outsourcing the accounts payable department
  • Increase visibility through real-time financial data access and analytics insights
  • Integrate accounts payable solutions with other systems, such as finance or ERP tools
  • Create dynamic controls for every user, from departmental stakeholders to the CFO
  • Implement well-designed workflows and purchasing processes unique to your business case

AP automation: Case studies and outcomes

There’s little doubt that accounts payable outsourcing and automation improve your organization through increased procurement savings, optimized pricing, enhanced profitability, greater efficiency, and better data insights. Automation offers all these outcomes without sacrificing the security or visibility of your end-to-end AP process. 

These are just a few of the high-performing clients Order.co has helped increase efficiency in their procurement process:

ZeroCater: Using Order.co, this office catering company cut its invoice volume by 50x, improved its spend visibility to 100%, and eliminated organization-wide rogue spending.

SoulCycle: This well-known fitness brand streamlined processes across its 90+ locations by creating curated ordering with preferred vendors, implementing invoice consolidation to reduce monthly invoices from 1,500 to one, and improving budget tracking for better spend management. 

XpresSpa: Using AP automation in its 50 locations helped XpresSpa realize nearly 10 percent first-year savings, reduce its management approvals to 47%, and achieve 100% order compliance.

financial audit checklist
Tool

Financial Audit Preparation Checklist

Financial audits gives companies an objective read of their financial statements. Use this checklist to get started.

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Get streamlined AP without outsourcing using Order.co

While accounts payable outsourcing is a viable option for some organizations, most companies can get the benefits of outsourcing while maintaining higher efficiency and security using a procurement platform. 

  • Order.co streamlines many accounts payable functions through advanced AP automation and offers valuable analysis of procurement spending. 
  • The platform reduces AP burden and automates GL coding for a more accurate accounts payable ledger.
  • Invoice processing and automatic reconciliation create the efficiency of an outsourced solution while eliminating the uncertainty associated with third-party teams. 
  • The platform's payment features help consolidate hundreds of invoices into one easy-to-pay bill. 
  • Order.co’s curated product catalogs provide a centralized and dynamic ordering process that empowers teams to get what they need more efficiently. 

To see how automation can improve your business outcomes with a scalable solution, request a demo of Order.co.

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