Term Paper on "Marketing Plan Outsourcing Accounts Payable Business"

Term Paper 18 pages (7207 words) Sources: 1+

[EXCERPT] . . . .

Marketing Plan - Outsourcing Accounts Payable Business

As an industry outsourcing is developing quickly. It is an optimistic experience for most companies that have outsourced, that have inclination to outsource some more, and 45% have increased the capacity of their outsourcing and 42% intend to do so by the end of 2005. (Business Process Outsourcing Adoption & Perspectives in Western Europe) as per one analysis published by U.S. market intelligence firm IDC in July, it has been predicted that the global finance and accounting outsourcing market is required to rise by 9.6% during the ensuing five years to reach U.S.$47.6 billion in 2008. Most of the businesses will outsource such services overseas especially to India and Eastern Europe. As revealed by the Everest Group of outsourcing consultants based in Toronto about 80% to 90% of the finance and accounting volume outsourced by U.S. companies was dealt in overseas. (Bombay bound)

While concurrently improving business effectiveness and flexibility, the need to reduce costs is unexpected. Developing competence and reducing non-value-add processes perceive a way for the Corporate, who are confronting vast pressure on top line growth and profits. Simultaneously post-Enron legislation, mainly the U.S. Sarbanes-Oxley constraint brings pressure to enhance the level of reporting, responsibility and revelation in financial matters. Even other back-office procedures which are important to the business, but which do not generally make a competitive differentiator, like the administration of human resources, are also of importance to legislative and efficiency pressures. The chance of securing procedures being updated and further savings utilized through outsourced economies of scale is initiated up by the developments in technology and by global markets. The lasting value of Outsourcing companies is acknowledged by its improved efficiency and competence of process management, once they are occupied in an outsourcing agreement. (Business Process Outsourcing Adoption & Perspectives in Western Europe)

The outsourcing supplier gives right to use to industry best system and incorporated technology, which makes things easier, homogenize and restructures workflow. The advantages are even more extensive, when they are joint with a lesser-cost background, maybe near shore or offshore with service managements given nearby and nonstop process development. The companies that undergo high pressure to give global integration are those who outsource: 56% of the companies presently outsourcing or executing have a central or federated organization. Another main reason for accepting business process conversion through outsourcing is that the investments released in the preliminary outsource can finance the course improvement phases, mainly if this contains labor arbitrage by an inexpensive location. The business motives for outsourcing seem to be convincing and are optimistic. (Business Process Outsourcing Adoption & Perspectives in Western Europe)

The outsourcing provisions in most of the cases constitute the practical scope of generating varied sources of value. The process of outsourcing makes the company possible to manage its scarce resources distribution in a better way so as to enhance the hold on savings and ensure a part of the savings through contractual assurance to cost and service goals which enable to reduce the risk of the company. It is worth examining each of the sources of value generation: (Accounts payable outsourcing. (http://www.opiglobal.com) Firstly it can be viewed as better distribution of scarce management resources: It is imperative in respect of some companies that they desire to place their senior personnel to concentrate on the fields of competitive differentiation instead of getting them involved in 'commoditized' processes. The concept of outsourcing is considered to be a solution to them. (Business Process Outsourcing Adoption & Perspectives in Western Europe)

Such advantages are considered worthy specifically for the companies with several fields to develop at once and who have limited management talent. In such cases application of an outsourcing provider gears up the all-round modes of operation by allowing several activities to be restructured simultaneously. To illustrate, one large company wanted to enhance its quality assurance services, the mode of its dealing with the largest clients, its procurement processes and the back-office processes simultaneously. Since making all such variations would have enhanced the pressure on management the company decided that it is worthwhile to take decisions to outsource the activities which can conveniently be detached from its core business like the back-office operations and renovate the other three areas internally. (Business Process Outsourcing Adoption & Perspectives in Western Europe)

The Outsourcers evidently have attained the economies of scale more rapidly than that of the individual companies. Above all assisting the companies by means of transitions and entailing a one and well-lubricated service to the varied consumers are taken to be their core business goals. They have a considerable number of people at their ready disposal-people who are skilled as a result of the training been given on better practices in their respective fields. To illustrate, an outsourcer concentrating, on one aspect i.e. finance and accounting for multiple companies can conveniently accommodate that of another company with out much additional cost. It already possess a deep-rooted organization for management of the processes with regard to accounts payable, account receivables, and general ledger, along with an it platform that can conveniently cater to the specific company oriented requirements. A single company is required to have built all-new systems so as to restructure its finance and accounting activities in-house. Speaking otherwise a good outsourcing provider has no necessity to establish the essential infrastructure from the beginning. They can conveniently execute a job of 18 months within a period of 6 to 9 months. (Reaping the benefits of business-process outsourcing)

There is a tremendous growth around the concepts of Accounts Payable, accounts receivable and business process outsourcing during the recent times. This fact is attributed to several facts. The objectives of the company are to process the invoices in a way which is to be more quick, smart and accurate. However, the automation and streamlining invoice processing is seen as a complex affair. In most of the organizations, invoice management entails paper documents like faxes and e-mails along with the organized and unorganized data that is required to be consolidated. There exists also manual hand-offs among the work process which are incompetent and are prone to potential human error. Business processes may not be dexterous enough to entail easy execution of fine tuned vendor payment rules. The work volume and resource distribution within the department is required to indicate the varied prioritization of work based on cash management goals however, mostly it doesn't. The next way out is outsourcing accounts payable. (Accounts Payable: (http://www.global360.com)

The business process outsourcing and accounting normally executed with involvement of the necessary software attributes following are considered as the major growth sectors. Most of the companies have initiated outsourcing the processes involving accounting functions abroad mostly to the locations where the labor is comparatively cheaper. Irrespective of the fact that most are not in favor of outsourcing the major details of the company, many are of the opinion that these are only of less significance entailing consideration. The next objective in the field of outsourcing is the concept of knowledge-based high end activities simultaneously emphasizing more on the quality infrastructure and committed secure and quality services by quality companies. (What are the benefits of account payable outsourcing?) There is nothing new of outsourcing non-core corporate jobs like accounts payable. Small or large companies have been outsourcing that work that gave additional value to the bottom line for many years. (Accounts Payable Processing: BPM Outsourcing) the top two outsourced financial institutions in the U.S. are: payroll/billing/accounts payable and benefits/claims administration. (Less Than Half of Large U.S. And European Companies Say Outsourcing is Cost Effective, PricewaterhouseCoopers Find)

The most commonly outsourced process is the accounts payable with 38% of the companies already outsourcing accounts payable. (Business Process Outsourcing Adoption & Perspectives in Western Europe) Businesses start by outsourcing the primary accounting processes like bookkeeping and accounts receivable and payable management. The study conducted by Everest Group during November, 2003 reveals that out of the 86 dealings registered in U.S. during the period 1991 to October 2003, 81% have been involved in the process of outsourcing of accounts receivable and 65% accounts payable. However, amazingly, the same study reveals that almost one out of two businesses - of 44% completely outsource their accounting and finance activities along with the budget forecasts, treasury and risk management and analysis reports. (Bombay bound)

Accounts Payable - AP is thus one of the business process jobs, which does not add to the bottom-line of the business. In reality, it is an essential business process job that adds no calculated value. (Accounts Payable Processing: BPM Outsourcing) Outsourcing accounts payable can take the shape of 'system administration, processing, settlement, query management and records management'. (Cost effective and efficient business services) There are a number of steps in accounts payable procedure. This consists of all of the steps from the moment a statement comes in from a vendor to the real printing and posting of the check, which could be receiving hardcopy or electronic invoices; entry of data; Resolving mismatched invoices; Imaging… READ MORE

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