BPO essentially allows your firm and your firm’s key personnel to focus on its core competency and relieve itself of burdensome, but necessary repetitive tasks by outsourcing those tasks to a third party business partner for fee – usually based on a per item or transaction fee. A common functional area to consider outsourcing to a trusted business partner and that we will discuss here is the Accounts Payable function.
Accounts Payable is generally considered a highly repetitive process, is common across all organizations regardless of size or industry and largely is known to become highly inefficient when the job functions and systems have been internally developed and modified over an extended period of time without the benefit of outside review.
To address the problem - and not surprisingly - more accounts payable clerks are added to the department, the influx of paper builds, payable cycles begin to get extended, discounts are missed, and the inefficient and poorly designed business processes naturally begins to spiral out of control without giving much thought to the actual costs that have been placed upon the organization to support the AP function.
When an organization is experience growth either through the addition of people and paper intensive processes, outsourcing the AP function to a BPO firm will allow the organization to focus on its core competencies. The organization can leverage the BPO's workflow process automation methodologies, its compliance/ERP expertise and efficient business practices, and allows the organization to directly benefit from a technology stack specifically optimized to address the challenges associated with Accounts Payable departments of small to mid-market organizations.
Time to market is the yet another significant advantage of engaging with a BPO firm. Consider how long it will take you firm to seek board approval, budget, purchase, implement and support a Accounts Payable automation solution integrated with your ERP solution such as SAP, Oracle Financial, etc. vs. engaging with a BPO who already has such an infrastructure that can be spun up and fully operational in days or weeks.
Lastly, the concepts of BPO can be extended beyond Accounts Payable example to other functional areas such as: mortgage processing, new applicant processing, claims processing, lock boxes, Human Resources, back file or paper to digital conversion processes, and many more functional areas.