Accounts Payable Looks Inward: Developing Alternatives to Outsourcing
If looked at by the typical scope and structure of most new transactions, Procurement BPO has largely remade itself in recent years, with a significant focus on bringing in targeted expertise and category knowledge rather than a broader organizational hand-washing (AKA: outsourcing) initiative. And many companies are beginning to focus on developing internal competencies for emerging procurement and sourcing areas, often in a shared services type environment for purchasing process and beyond. For example, companies are in-sourcing more than they’re outsourcing supplier risk management, vendor management, supplier diversity, commodity management and source-to-pay systems deployment and management.
Accounts payable, which should be (but isn’t always) tied to purchase-to-pay (P2P) implementations that include a focus on invoicing, working capital management, discounting and related areas, has witnessed a similar insourcing focus as well, part of a broader F&A shared services trend. According to a recent article in CFO, “After outsourcing mundane finance and accounting functions for years, some companies are now insourcing those same tasks … But some are finding that ‘insourcing’ those same tasks can save just as much money and may also increase efficiency.”
This shift is making teams more accountable (not to mention more personable, compared to faceless outsourcing). In one F&A-led initiative referenced in the CFO article, one company leader is noted as reminding “her staff that they cannot point the finger at an offshore location and say, ‘that was India. They made the mistake.’ She said her reports need to consider the outsourced work as still their responsibility and, in a sense, the contracted staff as part of their own staff. ‘They sit in a different time zone but that’s their staff,’ she said.”
Perhaps most important in the accounts payable area, a broad range of technologies have matured in recent years that can enable companies to shift from inputs based on labor to outcomes based on automation-led value. This is a topic we explore in detail in the Spend Matters Compass series analysis, E-Invoicing Comes of Age — Discovering What’s Possible From the Latest Electronic Invoicing / Invoice Automation Capabilities, which we invite our readers to download.
From basic invoice automation approaches that focus on quality at the source through combined with fewer clerk and manager level resources to more advanced deployments that can enable companies to capture an order of magnitude greater discounting and early payment opportunities, there is no doubt the accounts payable value proposition is shifting as fast as the outsourcing, shared services and technology environments that can support it!