10 Questions to Ask When Outsourcing

Not every AP department has the resources or expertise to do all of the functions it needs to---so that's where outsourcing comes in. Outsourcing is defined simply as work done by a third party. These third parties can call themselves service providers, solution providers, or consultants. In essence, the outsourcing decision is analogous to a make-versus-buy decision.

AP functions or tasks frequently outsourced include freight/telecom audit and bill-paying, check printing, 1099 preparation, T&E processing, VAT reclamation, and post-audits.

In addition to the typical questions concerning price, procedures, etc., here are 10 questions that may not all come to mind at first blush, but they need to be addressed:

1. Is the outsource service provider financially sound and are they in this business for the long run?

2. Who are their clients and how do the clients feel about the relationship?

3. How well can they adjust to an increase in the volume/level of services?

4. Can we rely upon the outsourcer to keep us current?

5. Will they take us to the cutting edge in terms of processes and technology?

6. Are their costs reasonable/cheaper than in-house?

7. If cost is the driving factor, will they remain cheaper or are just trying to attract our business and then increase prices?

8. Can the outsource provider's process satisfy our control standards?

9. Can we manage results via reliable metrics?

10. Over time will the outsourcer share their efficiency gains with us?