While companies begin outsourcing the high-end processes in the F&A domain, one of the underserved processes is AP or Accounts Payable as it is commonly known.
The market for AP has seen a lot of changes in the recent years and organizations are exploring possibilities with offshore solution providers.
The intention is to reduce the cost burden and get a comprehensive leverage that has a significant potential to reduce expenditure and deliver business value.
The non - critical functions Outsourcing all functions in the AP domain is not really possible but one needs to first understand and identify the non-critical functions.
This will help a business to source out certain functions while yet maintaining full control on the other strategic functions in-house.
Some of these non-strategic functions are -

• Reporting and Analysis - includes custom reports, standard reports, audit trails etc.
  
• Invoice Receipt - comprises of envelope reception and opening, sorting/ batch invoices, removing stamps, inserting separator pages.
  
• Document Imaging - includes image enhancement, invoice scanning, work queue managing etc.
  
• Data Extraction - ICR/ OCR / OMR, data validation, indexing, manual data entry etc.
  are all included in this category of functions.
  
• Approval Workflow - is constituted of multiple levels of approvals, escalation processes, alerts, notifications, and approval routing.
  
• Content Management - means functions like invoice Meta data storage and invoice image storage, search and retrieval etc.
  

Why outsource the front end? Front end should be outsourced for two basic reasons.
One, the prepping, data entry and scanning etc.
, aren't really the value - adding functions to the approval and payment process.
Two, even automated data capture requires regular monitoring and is cost - prohibitive.
However, at the same time, advanced tools can certainly add far more value to it in terms of accuracy, shorter TATs and regular work flow.
Benefits There are a lot of benefits of sourcing out the accounts payable functions.
Cost being just one of them, it also helps in value generation in terms of capacity building, flexibility and scalability.
Further the client service is improved; better products and services are delivered because of streamlining of the process.
Some of the major benefits are (I'm still listing the cost arbitrage here)

• Reduction of Upfront Costs
• Faster Deployment of Services
• Quick Going Live time
• Increased Efficiency
• Decreased Labor Cost
• Minimized Risk
• Vendor / Service Provider Relationship Management

All these benefits are useful for the customer because in-house technological investments (specially licensed software etc.
) can prove expensive.
On the other hand service partners charge per transaction processing.
Further their web - operations make the process smoother and faster.
This helps businesses by converting fixed costs into variables and also allows them to free up their capital for other purposes.
Also the outsourced SaaS models as operated on cloud basis reduce the hardware cost as well as periodic renewal charges etc.
Similarly, in case of outsourcing, risks are relatively minimized because of high proficiency and quicker turnaround time.
The service deployment is also faster because of effective work flow and workforce management.