The 4 best ways that CFOs maximize ROI with outsourcing AP

CFO Decision

The 4 best ways that CFOs maximize ROI with outsourcing AP

 

 

If you ask finance executives their opinion of AP (Accounts Payables, Supplier Accounting), chances are we all give a similar response: AP is the cost of doing business.

However, there are CFOs with a positive attitude to change, that realize the value that outsourcing can bring to AP, a critical function for business. Although AP is not the center of the activities of everyday life of a CFO, a move to outsourcing can evolve the AP department from incurring costs to generating income.

What are the parameters the CFOs use when studying the ROI of AP outsourcing?

 

1. Benefit from discounts for prompt payment

Experienced CFOs know that AP outsourcing leads to a high increase in productivity, based on digitization, electronic matching and electronic management of the invoice approval process, saving time and money. However, few organizations take advantage of prompt payment discounts. The speeding up of invoice approvals through AP Outsourcing opens the door to negotiate agreements with suppliers. An invoice does not have to be discounted in itself, but if an offer is made to pay on time in exchange for a discount of 1.5 or 2% up to 30% of suppliers would accept. This, for example, is a very compelling argument if a third of the costs benefit from this discount. And, also the fact of having satisfied suppliers.

2. Harnessing AP data to improve cash flow management

It is essential to use segmentation tools to optimize payment to suppliers. If done, not only is the visibility of your cash flow increased, but the effectiveness of the outlay is also increased. It is important to group suppliers based on the importance of the relationship with suppliers - the volume of payments and the value of purchases. By prioritizing payments, we can improve relationships with suppliers and at the same time ensure prompt payment.

 

3. Create scalable processes that reduce recruitment needs

If the AP department is not outsourced, how do the team members employ their time? Are they frustrated because they are constantly looking for information? AP outsourcing reduces manual labor, and thus allows staff:

· Process more invoices per person per day

· Faster handling of exceptions or incidents

· Quicker management of providers' queries

4. Transform AP into a profit center

AP outsourcing means an overall reduction in the costs of payment for 93% of organizations. The intelligent CFO realizes that there is a better way of cash management. It is not only the elimination of paper, but a great number of benefits can be obtained, which can make AP a profit center.

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