A paper by Anybill’s Sander Mueller and Peter Bepler on ‘The top 10 myths of AP outsourcing’ have much more general application. It revealed basically the essence of how to use outsourcing :
- Myth: we’ll loose control. You shift the process of handling invoices, etc. NOT the control
- Myth: it’s not secure. Outsourcing can and should improve the security of your data and processes as third parties pay much more attention of this than many corporate treasury departments
- Myth: it’s an all or none proposition. Only outsource as much of your operations as makes business sense. It doesn’t have to be all or none
- Myth: it isn’t really more efficient. Independent research shows that outsourcing, e.g. Accounts Payables processing, is much more efficient - as much as 59% faster
- Myth: the function is core to my business. Just because AP/treasury processing falls under “category” of finance/treasury doesn’t mean it is core to your business. A core competency provides customer benefits that is hard for competitors to imitate.
- Myth: outsourcers don’t understand our business. Your business is unique but how you process invoices, etc. shouldn’t be.
- Myth: outsourcing is only useful to reduce headcount. If reducing staff is your goal, outsourcing has been proven to do that. Much more important is retaining staff and expanding their capability
- Myth: my ERP system can do this already. AP and/or treasury is not a native functionality in ERP systems. Much more is needed.
- Myth: we’re too small. You don’t need to be a big company to benefit from outsourcing because the economies of scale the outsourcer brings significant savings, and it frees up the corporate treasury department for more strategic tasks.
- Myth: we’re too big. All sizes of companies can be handled, allowing companies to focus just on the critical processes or invoices.
Corporate treasury outsourcing is growing fast in corporate treasury departments as they outsource functions to banks, to third party service providers and to the treasury outsourcing providers. A key skill in the corporate treasury department is managing the balance between the different types of outsourcing whilst maintaining overall control. Outsourcing without control is madness.
Like this item? Get our Weekly Update newsletter. Subscribe today