Over the decades, business process outsourcing (BPO) has shifted from primarily a cost-cutting measure to a method of supporting in-house staff. And with the ongoing labor shortage, offloading some of the responsibilities through outside expertise just makes sense.
Already 57% of businesses outsource different processes to better focus on their core business functions and operations. Typical departments that benefit from the BPO industry are customer service, human resources, information technology, technical support, and marketing.
But the top BPO service is financial and accounting processing. In fact, about 71% of finance executives outsource at least some of their tasks to a service provider.
Before we get into the weeds and zone in on how BPO companies help finance professionals meet their objectives, let’s talk about how BPOs work.
How does business process outsourcing work?
BPO implementation depends largely on an organization’s needs and size.
A smaller company or startup may invest in outsourcing as they don’t have the funds to build their own departments yet. Others may realize that shifting to a third-party service provider would improve business operations while reducing costs. Another common reason to choose to outsource for specific services is to relieve staff of ever-growing workloads.
In finance departments, workers often struggle to complete all of their tasks due to an immense amount of paperwork attached to accounting functions. In 2019, approximately 90% of invoices alone were processed manually worldwide. But as e-invoicing, cross-border payments, and complicated regulation become the norm, this is no longer sustainable in-house.
Common BPO service options for finance and accounting include:
- Accounts payable and receivable
- Account consolidation and reporting
- Tax management
- VAT tracking and reclaiming
Once a company knows what process they want to outsource, it must choose a BPO vendor and begin the implementation. Generally, an organization must analyze how each potential service provider might affect the budget and how the BPO company might influence tax requirements, compliance standards, and technology needs.
Once a BPO provider is chosen, the executive team or another in-house contact will be responsible for maintaining the relationship with the BPO vendor.
The difference between a BPO provider vs shared services
Sometimes an organization considers a shared services provider as an alternative to a business process outsourcing company. Shared service solutions essentially keep the operations within the company itself. While this model allows for greater control, it consumes the budget and resources meant for core business functions. Furthermore, all information technology investments must be maintained and updated regularly.
A BPO provider, however, takes on the burden of upkeeping a best-in-class technology stack and retains top professionals.
What are the benefits of business process outsourcing?
An outsourcing company has a number of advantages. And while 70% of organizations look to their BPO partner for cost reduction, they also benefit from flexibility, access to tools, and agility. Since a BPO company can scale alongside the organization and offer accelerated value, it often helps get products to market faster.
Of course, the main benefit is that a BPO partner reduces costs and resources that go to items other than core business functions. This opens up the door for smoother business operations. Other benefits include:
- Indirect financial benefits – Tax savings, fewer costs on information technology and maintenance, and other hidden savings add on to the primary cost reduction
- Competitive advantage – Since businesses can focus on their core process, meeting company objectives is often easier or quicker
- Customer satisfaction – As the organization can focus on its core business and provide better products and services, customers receive higher-quality services and goods
- Reduced load on in-house staff – Often a BPO partner is meant to reduce the stress of core staff. This allows your internal team to work on primary objectives and high-level tasks
- Access to cutting-edge tools – A BPO invests in and maintains its own tech stack, which is often best-in-class software for its industry. For financial BPO companies, this means artificial intelligence (AI), robotic process automation (RPA), and other advanced toolsets that automate and streamline repetitive tasks
BPO services for accounts payable workflow and compliance
Core tasks are often repetitive and time-consuming when it comes to accounts payable workflows and compliance. This increases the likelihood of error and increases costs.
Invoices, in particular, can eat up hours that your accounting professionals could be spending on mission-critical tasks. Furthermore, manually entering data is no longer a necessity with intelligent software. Artificial intelligence can often increase accuracy to 99% and process hundreds of invoices in minutes through invoice automation.
Intelligent invoice automation can instantly:
- Capture data from structured and unstructured data
- Match credit card and ETF data
- Cross check and verify information
- Automated reconciliation
- VAT and tax tracking
- Compliant SLAs
- Improve its accuracy over time
But outsourcing your automated data capture is about more than completing tasks. The right BPO partner provides more bang for your buck. Consider these numbers:
- Best-in-class AI software can reduce costs by 80%
- Invoices can be processed 74% faster
- The straight-through rate jumps from 21% to 67%
- Reduce paper and postage costs by 100%
- Up to 60% reduction in a billing effort
- ROI in 6-9 months
The fact is, choosing the right BPO partner for your automated data capture needs can streamline your finance department’s resources and provide significant cost and time savings.
Getting started with Itemize
Outsourcing automated data capture is about more than fast and cheap service. To truly stand out from the competition and develop stronger supplier relationships, organizations should be able to unlock the intelligent data in their thousands of finance documents. And the only way to do that is through intelligent automation.
Itemize harnesses artificial intelligence and cloud technology to automate data capture, reconciliation, and compliance verification of financial documentation to deliver better intelligence for compliance and audits.
To learn more about how Itemize can help your business scale, book a demo with our team today.