Accounts payable outsourcing: Is it right for you?

As your company grows, invoices pile up and payment runs become harder to manage. Many finance teams struggle to keep pace with payment processing as volumes rise. That pressure pushes organizations toward accounts payable (AP) outsourcing, where external specialists handle day-to-day processing while your in-house team focuses on oversight. 

Whether you’re exploring the benefits of outsourcing to reduce workload or evaluating the potential for cost savings, understanding how AP outsourcing works is the first step.

In this article, we’ll explain what AP outsourcing is and how it compares with automating AP in-house. You’ll also see how outsourcing interacts with cross-border payments, so you can decide whether this approach fits your finance strategy and control requirements. 

What is accounts payable outsourcing?

AP outsourcing—also called AP business process outsourcing—is a model where you hire a third-party provider to manage AP tasks for your business. 

You keep ownership of policies and outcomes, but your team no longer has to enter invoices or track every due date. Instead, you send that work to a specialist who handles invoice processing, routing, and payment execution. 

In a typical AP outsourcing arrangement, vendors send invoices to the provider who receives and processes them so they’re ready for review. The provider then routes spend to the right people in your company for approval, following rules you agree on up front. 

Once you approve, the team issues payments on your behalf and updates finance systems so the general ledger and reports stay in sync. This end-to-end payment processing model removes much of the back-office burden from your internal team. 

Why are companies seeking to outsource accounts payable?

As companies grow, they work with more suppliers, and finance teams must deal with a rising volume of invoices. That extra workload can create a bottleneck, and outsourcing frees up some of that bandwidth.  Here are a few other benefits of outsourcing the function. 

Reducing operational costs and overhead

Running AP in-house means carrying the costs of staff, training, and systems. Outsourcing turns many of those expenses into an affordable service fee that limits overtime pay or temporary hires during peak periods. It also makes AP spend easier to predict because pricing follows a contract or usage tier.

Improving efficiency and accuracy

Manual data entry and email approvals slow the AP process and increase the risk of errors. An experienced outsourcing provider combines staff with automation software to create a faster, more reliable process. The AI tools and structured workflows capture invoice details and move them through the approval path you defined. This consistency shortens processing times and reduces issues like duplicate or late payments.

Scaling AP without more headcount

Invoice volume rises as companies expand into new markets or add new products. Instead of launching a hiring spree every time that happens, you can rely on an outsourcing partner that adjusts capacity as needs change. This model works well for companies with seasonal spikes or rapid growth.

Accessing specialized expertise

Outsourcing companies bring experience from working with many industries. They understand common AP risks and build controls that support strong audit outcomes. Their platforms also give clearer visibility into where invoices sit and which suppliers are approaching due dates. Their automation software reduces manual tasks, improves accuracy, and reduces payment or processing delays. 

Key aspects of accounts payable outsourcing services

When you work with an AP outsourcing provider, you assign them specific tasks inside your payables process, while your team maintains control of policies and final approvals. Most arrangements cover several core responsibilities: 

• Invoice processing and categorization: The provider receives the supplier invoices through a dedicated AP inbox or secure upload portal. They capture the details from each document and categorize the spend into the right account and department. 
• Approval routing: Based on rules you define, the provider routes invoices to the right people for review. They apply spending limits and other checks before anything moves to payment.
• Payment scheduling and execution: Once you approve an invoice, the provider schedules payments on the dates you prefer. It issues funds through approved methods, such as bank transfers or checks, and records those payments back into your accounting or enterprise resource planning (ERP) system. 
• Vendor communication, fraud prevention, and compliance support: The provider often handles vendor questions about invoice status or remittance details. This reduces the number of routine emails your team needs to answer. It also builds safeguards, such as duplicate invoice checks or separation between people who approve and those who release payments. Providers document these workflows in a way that supports clean audits and internal policies. 

Pros and cons of accounts payable outsourcing

The advantages of AP outsourcing can take a lot of pressure off your finance team, but you’re trading hands-on control for a managed service. It comes with clear advantages and tradeoffs, so it's worth looking at both sides before you commit. 

Pros of accounts payable outsourcing

Outsourcing offers several clear advantages to strengthen AP operations:

• Lower and more predictable processing costs: A provider spreads its infrastructure and staffing across many clients, so your per-invoice cost often drops compared with running a fully staffed in-house AP team. Many firms use AP outsourcing pricing models based on a per-invoice price or tiers, making AP spend easier to budget. 
• Higher efficiency and fewer errors: Outsourced AP teams typically rely on AP automation software and tight workflows to capture invoice data and move items through approval faster than in paper- or email-driven processes. These automated workflows minimize manual interventions. 
• Scalability when volumes change: As invoice volumes increase with new locations or seasonal spikes, the provider can allocate more capacity without having to expand its team. 

Cons of accounts payable outsourcing

Despite the advantages, AP outsourcing isn’t a great fit for every team, especially if you need strong oversight:

• Less direct control over day-to-day AP: Once a third party runs your processes, you rely on their timelines, change management, and support queues. Urgent, out-of-sequence payments—like covering a missed invoice or supporting a key supplier on short notice—can take longer to process. 
• Data privacy and security exposure: To run AP for you, the provider needs access to sensitive data such as supplier records and payment data, introducing third-party risk. This concern grows if you’re outsourcing AP and receivable to the same vendor. Even if a provider has a Service Organization Control 2 (SOC 2) report, it still operates outside your environment. Vet them carefully and continue monitoring their controls to ensure compliance. 
• Potential integration and visibility gaps: If the outsourcing platform doesn’t connect cleanly to your accounting or ERP system, you may end up dealing with delays. It may also mean extra work to keep records aligned. 

Accounts payable automation vs. accounts payable outsourcing

AP automation and outsourcing both ease the load on your finance team, but they do it in different ways. The right choice depends on your company’s size, internal capacity, and appetite for control over day-to-day processing. 

Automation keeps AP inside your business. Your finance team still owns the process and the relationship with vendors but uses software to remove manual steps. Tools capture invoice data and update your accounting or ERP system as invoices move through approval. 

Outsourcing treats AP as a managed service. You contract a provider to run the operational work, while your team sets policies and reviews edge cases. This model suits companies that want to shift operational tasks to a partner rather than building or expanding an in-house function. 

Who benefits from AP outsourcing

AP outsourcing is best for:

• Companies without a dedicated AP staff that need recurring invoices and payments handled by a specialist partner.
• Businesses that want to increase AP capacity quickly without adding more employees.
• Organizations that prefer an end-to-end managed service where vendor questions and fraud checks sit with an external team. 

Who benefits from AP automation

AP automation is best for:

• Finance teams with in-house AP staff that want to streamline workflow and improve visibility across the process. 
• Businesses that want to keep close control over their AP policies and vendor relations while processing work quickly.
• Companies with established systems that can integrate automation tools smoothly, gaining efficiency without changing how the team is structured. 

Streamline cross-border payments with Oyster

As soon as you start working with international vendors or a distributed team, staying on top of who gets paid, when, and in which currency becomes much harder to manage through AP tools alone. AP outsourcing helps with invoice processing, but global payroll and contractor payments require specialized tools.

Oyster’s global payroll platform gives you a single place to pay your cross-border team while staying aligned with local labor laws and tax requirements. Calculate payroll and review each cycle in one system, with local experts validating data and guiding you through country-specific rules. This structure reduces risk and improves cash flow planning. 

To simplify cross-border payments alongside your AP strategy, explore Oyster’s global payroll and give your finance team a consistent way to pay people worldwide.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.