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What If You Don’t Outsource Invoice Processing?

What If You Don’t Outsource Invoice Processing?
Why do companies outsource invoice processing? What happens if you don’t? Explore the pros and cons of in-house vs. outsourced invoice processing, in this article on outsourcing of invoicing operations to increase efficiency.

In today’s competitive business landscape, efficient invoice processing isn’t just a goal – it’s a critical necessity. This process serves as the backbone of a company’s financial workflow, affecting everything from accounts payable to vendor management and cash flow. Inefficient invoice management can lead to a cascade of issues, such as payment delays and strained vendor relationships, ultimately bottlenecking your financial operations.

Opting for in-house invoice processing over outsourcing can have significant repercussions. Manual data entry and payment processing are not only time-consuming, but also prone to human error. These errors can lead to increased Days Sales Outstanding (DSO), affecting your cash flow and customer satisfaction.

Moreover, in-house systems often lack the advanced outsource invoice processing and technologies that specialized firms offer, resulting in a sluggish financial workflow and a compromised competitive edge.

The importance of invoice processing

Invoice processing is the backbone of a company’s financial health, directly impacting cash flow and customer relationships. Its efficiency or inefficiency can make or break a business, making it a critical area for optimization.

Significance of invoice processing in business

Invoice processing is the systematic method of managing invoices from receipt to payment. This involves a series of steps, such as data entry, verification, approval, and reconciliation. The significance of efficient invoice processing extends beyond the accounts payable department; it’s a strategic function that impacts a company’s bottom line. According to a CFO report, nearly 62% of total manual invoice processing costs come from staff labor, indicating the high cost of inefficient processes.

The role of efficient invoice processing

Efficient invoice processing is crucial for maintaining healthy cash flow. A quick turnaround in invoice processing can significantly improve a company’s Days Sales Outstanding (DSO), a critical metric for cash flow. According to a survey by IOFM, companies that automate invoice processing see a 53% lower cost per invoice.

Moreover, efficient invoice processing is vital for customer satisfaction. Accurate and timely invoices instill confidence in your clients, minimize disputes, and lead to quicker payments. A study by PayStream Advisors found that automation reduces invoice approval times by 82%, thereby improving customer relationships.

Differences between manual processing and automated processing

Factors Manual Processing Automated Processing
Time Manual Processing Time-consuming due to manual data entry and approvals. Automated Processing Faster due to real-time data capture and automated approvals.
Cost Manual Processing Higher due to labor costs and errors. Automated Processing Lower due to reduced labor costs and fewer errors.
Accuracy Manual Processing Prone to human errors in data entry and calculations. Automated Processing High accuracy due to automated data capture and validation.
Scalability Manual Processing Difficult to scale without adding more staff. Automated Processing Easily scalable with the same resources.
Compliance Manual Processing Risk of non-compliance due to manual errors. Automated Processing Better compliance due to built-in checks and balances.

Conventional invoice processing methods are often paper-based and require manual data entry, making them prone to errors and delays. On the other hand, automated outsource invoice processing offers advantages like cost savings, time efficiency, and compliance. Aberdeen Group’s report reveals that companies that switch to automated invoice processing can reduce their invoice processing costs by up to 80%.

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Outsource invoice processing: Consequences of not doing it

Businesses often weigh the pros and cons of outsourcing various functions to enhance operational efficiency. One such critical function is invoice processing. While the benefits of outsourcing this task are numerous, the consequences of not doing so can be equally impactful if not more. According to a Zenphi case study, the H&H Purchasing advantage of invoice automation has seen a 6x reduction in invoice processing costs. This fact underscores the financial consequences of not modernizing and the failure to outsource invoicing processes.

Check out the repercussions that companies may face when they opt to keep their invoice processing in-house.

Increased Days Sales Outstanding (DSO) due to conventional cash apps

In the world of finance, time is money. The longer it takes a company to process its invoices, the higher the Days Sales Outstanding (DSO). This metric is a key indicator of a company’s financial health, representing the average number of days it takes to collect payment after a sale has been made.

When businesses rely on conventional manual methods for cash applications, the DSO tends to increase. This elongated cycle not only ties up capital but also restricts a company’s ability to invest and grow.

Slow cash flow due to manual invoice processing

Cash flow is the lifeblood of any business, and slow invoice processing can lead to sluggish cash flow. When invoices are processed manually and in-house, there is a greater likelihood of errors and delays. These inefficiencies can lead to late payments, penalties, and even strained relationships with vendors and customers. In a worst-case scenario, a bottleneck in cash flow can lead to operational hiccups, affecting everything, from payroll to project timelines.

Customer dissatisfaction due to irregular delivery of invoices and complex designs

Customers expect quick and hassle-free transactions nowadays. Irregular delivery of invoices or complicated invoice designs can lead to customer dissatisfaction. This dissatisfaction isn’t just a one-time issue; it can have long-term repercussions. Customers may hesitate to engage in future transactions, and negative reviews can harm your company’s reputation.

Negative impact on business health and customer relationships

The cumulative effect of these issues can have a severe impact on both business health and customer relationships. Inefficient invoice processing can lead to a vicious cycle in which slow cash flow affects your ability to invest in customer relationships, which in turn leads to even slower cash flow.

Advantages for companies that outsource invoice processing

Outsourcing invoice processing is more than a trend; it’s a strategic move that offers a host of benefits. From cost savings to efficiency, the advantages are manifold. Let’s explore these benefits in detail, substantiating each point with real-world examples and statistics.

Advantages for companies that outsource invoice processing

1. Lower operating costs

One of the most compelling reasons to outsource invoicing processes is the significant reduction in operating costs. Companies can save on direct costs like labor, indirect costs such as overhead, and hidden costs that include penalties for late payments. For instance, an automated invoice processing solution can reduce your invoice processing cost by a staggering 30% on average.

2. Shorter cycle times

Outsourcing not only makes invoice processing more efficient, but also speeds up the payment processing cycles. Intelligent automation plays a crucial role here, enabling the real-time processing of invoices for faster approvals and payments. According to various reports, outsourcing can reduce cycle times by up to 65%.

3. Streamlined approval process

Getting an invoice approved can be a labyrinthine process, especially when multiple approvers are involved at different organizational levels. Outsourcing simplifies this by offering streamlined approval workflows.

4. Greater accuracy

Human error is inevitable in manual, in-house invoice processing. Outsourcing leverages automation to eliminate such errors, ensuring greater accuracy. This standardization and centralisation of invoicing data also make it easier to track and manage expenditures. IT firms, especially startups, usually struggle with invoice errors leading to payment delays. After outsourcing, the error rate generally drops from 5% to less than 1%, significantly improving payment cycles.

Comparative analysis: In-house vs outsourced invoice processing

When it comes to invoice processing, companies often find themselves at a crossroads: to keep it in-house or to outsource? Some are hell-bent on sticking with manual processes, despite the huge amount of time and inefficiency involved. Here is a detailed comparative analysis between the two, focusing on various parameters, such as efficiency, cost, and scalability.

Parameter In-house Processing Automated Processing
Operating costs In-house Processing Involves direct, indirect, and hidden costs like labor, overhead, and late penalties. Outsourced Processing Drastically reduces these costs, offering better invoice management.
Efficiency and cycle times In-house Processing Longer payment cycles due to manual processes. Outsourced Processing Shorter payment cycles due to automation and efficiency with human intervention involved.
Approval process In-house Processing Complex and time-consuming, especially with multiple approvers. Outsourced Processing Streamlined workflows for faster approvals and payments.
Accuracy and data standardization In-house Processing Prone to human errors leading to backlogs and delays. Outsourced Processing Automation eliminates errors and standardizes invoice formats.
Automation and efficiency In-house Processing Limited automation capabilities, leading to manual errors. Outsourced Processing High-level automation from receipt to payment, ensuring efficiency.
Improved cash flow and customer satisfaction In-house Processing Risk of incorrect invoices affecting rankings and customer satisfaction. Outsourced Processing Risk of incorrect invoices affecting rankings and customer satisfaction.
Customization and flexibility In-house Processing Limited to in-house tools and software. Outsourced Processing Offers a range of customizable solutions catering to specific needs

In-house invoice processing is often costlier, less efficient, and prone to errors due to manual involvement. On the other hand, outsourced invoice processing significantly reduces costs, enhances efficiency through automation, and minimizes errors, leading to improved cash flow and customer satisfaction. The choice between the two can impact not just operational costs, but also the overall financial health and scalability of a business.

Hitech BPO’s approach to invoice processing

Hitech BPO stands as a beacon of efficiency and reliability as an outsourcing invoicing provider delivering efficient outsource invoice processing. The company offers a comprehensive suite of services that not only streamlines the invoicing process but also adds layers of security and compliance, making it a go-to choice for businesses of all sizes.


Hitech BPO provides an end-to-end solution for invoice processing outsourcing. Their services range from automated data capture to intelligent workflow design, all aimed at reducing the operational burden on their clients. With a focus on leveraging the latest technologies, they offer solutions that are scalable and customizable to meet the unique needs of each business.

Commitment to High-Quality Services

Why should a company outsource its invoicing to Hitech BPO? The answer lies in their unwavering commitment to quality. Hitech BPO ensures the accurate entry of all data and maintains strict compliance with regulatory standards, including the Sarbanes-Oxley Act. This commitment to quality and compliance makes them trusted partners for businesses looking to outsource their invoice processing.

Data Security and Confidentiality

Hitech BPO understands the importance of data security in enterprises and has implemented stringent data security measures to protect client information. They uphold secure non-disclosure agreements and employ advanced encryption techniques to ensure the complete confidentiality of all data processed.

In a business landscape where efficiency and security are key, Hitech BPO emerges as a leader in invoice processing outsourcing. Their comprehensive solutions, commitment to quality, and stringent data security measures make them ideal partners for any business looking to optimize its invoicing operations.

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As we navigate through the digital age, the landscape of invoice processing is undergoing a seismic shift. Innovations and technological advancements are not just trends, but necessities that are shaping the present and future of this industry. Let’s probe these transformative elements.

future trends in invoice processing

Current trends and innovations

The invoice processing industry is currently buzzing with innovations like Artificial Intelligence (AI), Machine Learning (ML), and blockchain. These technologies not only make the process more efficient but also add layers of security and compliance. For instance, AI and ML algorithms can predict payment behaviors, helping businesses manage their cash flows more effectively.

The role of technology and automation

Technology has indeed become the cornerstone in reshaping the landscape of invoice processing. Automation stands out for its transformative impact in several key areas:

  • Error reduction: Automation minimizes the scope of human errors, which are often the root cause of delayed payments and compliance issues.
  • Efficiency boost: Automated systems can process invoices at a much faster rate than manual methods, thereby reducing invoice processing and payment processing cycle times.
  • Real-time analytics: Automation tools often come with built-in analytics features, enabling businesses to make data-driven decisions in real time.
  • Cloud adoption: The rise of cloud-based invoice processing solutions has added another layer of efficiency, offering benefits like:
    • Scalability to handle increasing invoice volumes.
    • Remote accessibility for decentralized teams.
    • Enhanced security protocols.

The future of outsourcing

As we look toward the future, outsourcing is set to play an increasingly pivotal role in the invoice-processing industry for several reasons:

  • Focus on core competencies: Outsourcing allows businesses to concentrate on their primary functions, leaving the specialized task of invoice processing to experts.
  • Cost-effectiveness: With the operational burden shifted, companies can realize significant cost savings, which can be invested back into the business.
  • Customizable solutions: The future is likely to see outsourcing firms offering more tailored, tech-driven solutions, such as:
    • AI and ML-based predictive analytics.
    • Blockchain for enhanced security and transparency.
    • Advanced OCR (Optical Character Recognition) for automated data capture.
  • Global talent pool: Outsourcing opens up access to a global talent pool of experts who can bring in best practices from various industries, further enhancing efficiency and innovation.

The invoice processing industry is in the midst of a technological revolution, making it more efficient, secure, and adaptable than ever before. As we look to the future, the role of outsourcing becomes increasingly significant, offering businesses the opportunity to leverage these advancements without the operational burden.


Outsourcing is not merely an option, but a strategic imperative for modern businesses. It allows companies to focus on their core competencies while entrusting specialized tasks like invoice processing to experts. This approach not only optimizes operations, but also provides a competitive edge in the market.

One of the standout advantages of outsourcing is the swift implementation of solutions. Outsourcing companies bring to the table expertise in multiple accounting platforms and software, ensuring seamless transition and ongoing management. This agility is particularly beneficial in today’s fast-paced business environment, where delays can have a domino effect on cash flow and customer satisfaction.

Outsource invoice processing to make a positive impact on your business bottom line. This approach offers a holistic solution that addresses the challenges of cost, efficiency, and security, among others. As technology continues to advance and the business landscape becomes increasingly complex, outsourcing stands as a reliable, scalable, and highly beneficial strategy for invoice processing.

Author Ritesh Sanghani
About Author:

 is a Director at Hi-Tech BPO for the past 10+ years. Ritesh has worked with several international clients and has executed BPO projects of varying scales and complexities.

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