According to the 2024 Accounts Payable Automation Trends Report, 52% of AP teams still spend over 10 hours each week processing invoices, and 60% continue to manually enter invoice data into their accounting systems.
For businesses relying on traditional accounts payable (AP) methods, this means that your team may be spending countless hours reviewing, verifying, sorting, and inputting each invoice. As a business scales, this method often turns into a bottleneck, affecting everything from efficiency to team morale.
Besides being slow, manual AP processing is costly. Studies estimate that each invoice can cost between $12 and $15 to process manually, with some reaching $30 or even $40. On top of that, manual workflows lead to errors, late payments, and other issues that can affect vendor relationships and financial health.
These challenges lead many businesses to consider outsourcing AP, hoping to cut costs and increase efficiency. But is outsourcing really the best option?
To help you find the answer to this question, we will discuss the benefits and drawbacks of outsourcing your accounts payable. By the end of this article, you’ll have a clear view of whether AP outsourcing fits your organization’s needs, or if another solution might serve you better.
Let’s get started!
Key Takeaways
- Outsourcing AP saves time but reduces control – Delegating accounts payable to third-party providers can cut labor costs, but also introduces risks around visibility, communication, and data privacy.
- Automation offers speed and transparency without external risks – With AP automation, you streamline invoice processing while keeping full control over your data and workflows.
- Outsourcing costs $3K–$6K/month; automation scales with use – Outsourcing fees vary by complexity, while automation typically follows a predictable, volume-based pricing model that grows with your business.
- Klippa SpendControl simplifies AP, securely and efficiently – Automate invoice capture, approvals, and payments in one platform, backed by GDPR compliance, fraud detection, and seamless ERP integration.
What is Accounts Payable Outsourcing?
Accounts payable outsourcing means handing over your AP tasks, like invoice processing, payments, and reporting, to a third-party provider. The goal? To lighten your internal workload and reduce costs by tapping into external expertise.
These providers specialize in managing day-to-day AP operations efficiently. They handle everything from capturing invoices and verifying details to scheduling payments and maintaining audit trails. Instead of your team spending hours on manual tasks, those responsibilities shift to an external AP team that’s built for it.
By outsourcing, your in-house finance team gains the freedom to focus on strategic priorities, like cash flow planning, budgeting, or vendor relationships, instead of getting bogged down in data entry or chasing approvals.
Of course, outsourcing AP comes with both upsides and trade-offs. Let’s take a closer look at the benefits first.
Benefits of Outsourcing Accounts Payable
Outsourcing AP is a popular way to lighten internal workloads and improve operational efficiency. Here are some of the main benefits:
- Lower costs – No need to hire, train, or manage an internal AP team. Labor accounts for up to 62% of AP costs.
- Increased efficiency – Trained specialists handle invoices faster and with fewer errors.
- Access to tools and expertise – Outsourcing partners bring advanced software and deep knowledge to optimize AP processes.
- Better cash flow management – On-time payments strengthen vendor relationships and may unlock early payment discounts.
While these benefits are attractive, outsourcing isn’t without its trade-offs. Let’s take a closer look at some of the cons of using external teams for your accounts payable management.
Drawbacks of Outsourcing Accounts Payable
Before outsourcing your AP, it’s important to weigh the potential downsides:
- Loss of control – You hand over core financial processes to a third party, which may reduce transparency and flexibility.
- Communication challenges – Language, time zones, or cultural differences can lead to delays and misunderstandings.
- Over-dependence on providers – If your provider runs into issues (like a data breach or financial instability), your AP operations could be at risk.
- Privacy and security risks – Outsourcing involves sharing sensitive financial data, which may not align with your company’s privacy policies or risk tolerance.
If these drawbacks raise concerns, AP automation might offer a more secure and scalable alternative, without giving up control.
Should You Outsource Accounts Payable?
If you’re looking to scale your business operations, accounts payable is one area that’s often considered for outsourcing. Handing AP tasks to a third party can save time and reduce overhead, but it also means giving up control and sharing sensitive financial data.
That’s why more companies are turning to automation instead. With the right tools, you can process invoices, manage approvals, and track payments in real time, without needing to outsource a thing.
So, which path is right for you? Let’s break it down.
AP Outsourcing vs AP Automation
As your business grows, so does the pressure to make accounts payable more efficient. That’s where two popular strategies come into play: outsourcing and automation. While they’re often mentioned in the same context, they solve different problems, and choosing the right one depends on what you want to achieve.
Outsourcing
Outsourcing shifts AP tasks to an external team. That might be a business process outsourcing (BPO) provider or an accounting firm that takes care of invoice processing, approvals, and even payments on your behalf. It’s an appealing option if you’re short on internal capacity or want to cut labor costs quickly, especially with offshore providers.
Automation
AP automation keeps things in-house but hands the heavy lifting to software. Tools like OCR and intelligent workflows capture, match, and route invoices automatically, so your team can stop spending time on repetitive tasks and focus on exceptions and strategic decisions. Automation brings consistency, transparency, and control, without the need to grow your team.
What about the cost?
Outsourcing is rarely a flat-rate solution. The cost typically ranges between $3,000 and $6,000 per month, depending on your company’s size, complexity, transaction volume, and the range of services needed. If you’re asking a provider to manage everything from AP to payroll and board-level reporting, costs can rise quickly.
By contrast, automation solutions often come with more predictable, scalable pricing, typically based on usage (e.g., number of invoices processed per month). You’re investing in tools, not headcount, which means fewer surprises as you grow.
So, which is better?
It comes down to what you value more: speed of delegation or depth of control. Outsourcing gets tasks off your plate fast, but you’re still relying on human labor, just not your own. Automation requires more upfront investment, but it pays off with long-term scalability and insight you can act on.
With Klippa SpendControl, we’ve helped businesses across industries move away from manual AP, without outsourcing. The result? Faster invoice cycles, fewer errors, and better control.
Take a look at how companies like MUFG, BAS Consultancy, and Mechan transformed their AP process with our automation solutions.
Automate Your Accounts Payable with Klippa
Automating accounts payable can be a game-changer for your business. With Klippa SpendControl, you can easily manage your AP to have a clear overview of your payments and ensure all your bills are paid on time.
Klippa SpendControl uses advanced OCR technology to automatically extract and process key information from invoices with automated data entry, speeding up the overall turnaround time. Watch the video below to see how our solution works in more detail.
Klippa SpendControl offers core features that will enhance your accounting process in no time:
- Manage your vendor invoices, employee expenses, and business credit cards in one platform
- Scan, submit, process, and approve transactions via web or mobile app
- Achieve 99% data extraction accuracy with Klippa’s OCR
- Regain control over your accounts payable with intuitive dashboards
- Customize your approval management with multi-level authorization flows
- Never fail to comply with tax and data privacy regulations with our ISO27001-certified and GDPR-compliant solution
- Rely on automatic multi-currency support for international payments
- Prevent invoice fraud with built-in duplicate and fraud detection
- Integrate SpendControl with your accounting and ERP software, like Quickbooks, NetSuite, or SAP
FAQ
Yes, accounts payable can be outsourced to a third-party provider. This means handing over tasks like invoice processing, payment execution, and reporting to an external team, often to reduce internal workload and costs. However, outsourcing also involves giving up some control and sharing sensitive financial data, so it’s important to weigh the trade-offs.
Outsourcing AP typically costs between $3,000 and $6,000 per month, depending on your company’s size, complexity, transaction volume, and the scope of services required. The more complex or high-volume your operations, the higher the cost. These fees often include labor, tech tools, and service-level agreements.
Yes, accounts payable can be fully or partially automated using software. AP automation tools like Klippa SpendControl use technologies like OCR and AI to extract invoice data, match it to purchase orders, trigger approval workflows, and prepare payments, all without manual input. It helps businesses reduce errors, cut costs, and retain full control over their financial processes.