Why Global Companies Are Outsourcing Accounts Payable and Receivable Services to India

Outsourcing your Accounts Payable and Accounts Receivable processes transforms the department from a cost center to a strategic growth driver.

Traditionally, the AP/AR function focused on compliance tasks (processing vendor payments, sending invoices, and reconciling accounts), which, for global companies, involved a patchwork of country-specific processes, siloed ERP systems, and local teams that worked independently.

Today, the AP/AR department gives global companies a competitive advantage, fueling expansion by freeing up working capital, strengthening vendor relationships, and scaling finance teams without increasing overhead costs.

This article shows how India’s expertise in Accounts Payable and Receivable services, low labor costs, and large pool of accounting talent provide global companies a steady source of AP/AR capacity to increase profits and grow their operations.

Why Global Finance Leaders Are Reconsidering AP/AR Operations

Several factors are responsible for the rethinking of accounts payable and receivable operational strategy in the finance and accounting industry.

Here are two major ones:

Operational strain of scaling AP/AR internally

Finance leaders are constantly seeking opportunities to expand into new markets, which come with a share of operational challenges.

Higher transaction volumes, multi-currency payments, and complex local compliance requirements will overstretch their internal teams except they hire quickly and effectively enough to manage team capacity, which is unlikely considering the cost and availability of accounting talent.

Left with the same number of AP/AR staff to manage increased transaction volumes, internal AP/AR teams struggle with burnout and operational inefficiencies that delay payments, strain vendor relationships, and risk non-compliance.

It doesn’t help that most global companies rely on outdated AP/AR workflow systems that require more manual work than necessary, which worsen payment processing delays, increase the time spent chasing overdue payments, and reduce working capital.

Cash flow visibility and control issues

Using legacy systems to manage AP/AR processes creates information silos and bottlenecks that deprive CFO, Controllers, and other finance leaders of access to the information they need to understand their AP data to make timely decisions.

The lack of automation and reporting features also prevents global finance teams from identifying aging receivables, viewing customer payment history, and measuring AR health to control credit.

Talent and tech resource limitations

The accounting talent shortage in Western markets has made it more expensive to find, hire, and maintain in-house professionals than many finance leaders can afford.

It can also be difficult to justify the financial investment required to implement and maintain modern AP/AR tools, especially because AP/AR is not a core business function.

These challenges often force finance teams to turn to non-accounting staff, who lack the expertise to deliver services that meet global AP/AR standards.

What’s Included in Offshore Accounts Payable and Receivable Services?

Offshore accounts payable and receivable services process vendor payments and manage receivable collections to improve cash flow and ensure compliance with global standards.

Here’s what’s included:

• Accounts payable: invoice handling to payment runs

Outsourced AP teams manage the entire payables cycle from receiving (and verifying) supplier invoices, coding them to the correct cost centers, and getting necessary approvals, to scheduling and executing payment runs.

This includes flagging discrepancies for resolution, handling vendor queries, and ensuring payments are processed accurately and on time to maintain vendor relationships and take advantage of early payment discounts.

Your offshore accounts payable service provider will conclude the process by categorizing expenses and generating reports that help with budgeting and auditing.

Accounts receivable: invoicing, collections, reconciliation

Accounts Receivable teams manage your payment collection tasks to reduce bad debts and strengthen cash inflows.

They do that by creating and sending invoices on time, monitoring due dates, and managing the collection process to minimize days sales outstanding (DSO).

While at it, they attend to customer enquiries and resolve invoicing disputes to encourage early payment. Your offshore Accounts Receivable service provider will also assess customers’ creditworthiness to determine payment terms and reduce bad debts.

When invoices are paid, the AR team will apply the payment to the correct accounts and reconcile customer balances to ensure the ledger reflects the financial activity (payment).

Reporting, compliance, and performance tracking

Beyond timely and compliant payment processing and collection, outsourced AP/AR teams provide reports that help CFOs understand their company’s performance and align financial operations to the company’s objectives.

With metrics like collection efficiency, DSO, invoice cycle times, and payment accuracy, financial leaders can compare their current AP/AR processes with historical data and industry standards to identify gaps in the accounts payable and receivable services.

Why India Is the Top Destination for AP/AR Outsourcing

India is the most popular destination for CFOs, Controllers, and other finance leaders looking to optimize cash flow and reduce operational strain because of its:

• Skilled talent pool and financial expertise

India’s academic emphasis on technical, business, and finance education has made its accounting professionals highly competitive on a global scale. Its outsourced accountants are trained in international accounting standards, like GAAP and IFRS, which enables them to service companies with a presence in multiple countries.

Understanding these strengths, the Big Four accounting firms (Deloitte, PwC, KPMG, and EY) are also investing heavily in the Indian finance and accounting outsourcing market, employing over 140,000+ accounting professionals. This has further improved the quality of AP/AR and other accounting talent in the Indian outsourcing ecosystem.

These professionals are highly skilled in complex financial operations, like AP/AR services, with experience serving global finance teams with advanced ERP systems, such as SAP, Oracle, and NetSuite.

• Cost advantage and scalability

The cost of maintaining accounting teams in India is significantly less than hiring in-house AP/AR teams in countries like the U.S., U.K., and Australia, thanks to its relatively low labor costs, which are informed by the low cost of living and differences in exchange rate between the Indian Rupee and the USD and GBP.

Moreover, Indian outsourcing providers enable global companies to hire as many accounting professionals as they need without committing to a long-term relationship. This allows global finance leaders, CFOs, and Controllers to add accounting talent to manage fluctuating workloads, knowing they can easily scale down once their needs change.

• Time zone and turnaround benefits

India is nine (9) hours ahead of the U.S. At first, this can feel like a challenge for team collaboration, but global companies see it as an opportunity to provide 24-hour services.

It enables the offshore team in India to complete AP/AR tasks overnight. By the time you resume work the next business day, the work will be ready for your review and approval.

This strategy can significantly improve your AP/AR workflows by ensuring that payment issues are promptly addressed.

AP/AR Outsourcing vs. In-House Teams

Cost breakdown and resource comparison

Aspect	Outsourcing to India	In-House Teams
Salary	$29,000 annually per full-time equivalent.	$68,000 annually per clerk.
Infrastructure Costs	None. Cost is included in the monthly subscription fee.	Up to $100,000 a year, depending on business and team size
Employee Benefits	None	Up to 20% of base salary
Recruitment Costs	Indian outsourcing providers handle hiring and training, with pre-vetted teams ready in 7 days.	$5,000–$15,000 per hire, including job postings, interviews, and onboarding. It takes 30–60 days to fill roles.

Workflow control and transparency

In-house Team

In-house AP/AR teams give CFOs direct control over priorities and the ability to adjust workflow processes. However, reliance on legacy systems limits real-time reporting, even with an in-office AP/AR department. The volume of manual work involved in using legacy systems also increases error rates, which significantly compromises the financial decisions.

Outsourced AP/AR Team

Outsourced AP/AR teams make up for direct control by providing real-time visibility into your AP/AR workflows using standardized processes, customizable workflows, and real-time dashboards. Indian AP/AR professionals provide strict service-level agreements (SLAs) that enable you to hold the outsourced Accounts Payable and Receivable team accountable for timely and quality services.

Productivity and strategic focus gains

In-House AP/AR Team

With an in-house team, your accounts payable and receivable team is largely a cost center because it will consume resources without commensurate revenue. With the accounting talent shortage getting worse, in-house AP/AR staff are stretched thin, increasing the chances of errors and compliance issues.

Outsourced AP/AR Team

Offloading AP/AR work helps finance teams reclaim time for higher-value, strategic tasks, such as cash flow optimization, vendor negotiations, and strategic planning.

Outsourced teams use AP/AR automation tools that accelerate invoice processing by up to 80% and reduce days sales outstanding by about 20%, saving some companies time and enabling others to take advantage of valuable opportunities.

Technology and Integration with Offshore Teams

Outsourcing your AP/AR processes to India, or anywhere else, is only possible because of the technology that allows teams in different countries to share data, collaborate, and oversee one another.

Tools and platforms commonly used

Offshore AP/AR teams in India are knowledgeable in the accounting and ERP systems that global companies already use, including SAP, NetSuite, and QBO.

This allows them to easily integrate into your existing systems to save you the need to waste time and money overhauling your tech stack.

Here are some of the categories of tools and platforms commonly used:

• Enterprise Resource Planning (ERP) Systems: These tools centralize AP/AR data and automatically send and receive invoices, pay bills, and record payment information. Examples are SAP and NetSuite.

• Accounting Software: Creates invoices, receives payments, and matches transactions with bank records for accurate financial reporting. Examples are QuickBooks and Xero.

• Automation and AI Tools: AP/AR automation and AI tools use artificial intelligence (AI), optical character recognition (OCR), and robotic process automation (RPA) to automate data entry, invoice matching, reconciliation, and other time-consuming accounts payable and accounts receivable tasks. Examples include Tipalti, Bill, HighRadius, etc.

• Collaboration Tools: These tools centralize communication and collaboration between finance leaders and their outsourced teams, helping them communicate in context. Examples are Slack and Microsoft Teams.

• Workflow Management: Accounting workflow management software enables finance leaders to assign AP/AR tasks, track progress, and eliminate bottlenecks to hit deadlines.

Secure data sharing and approval workflows

AP/AR outsourcing teams rely on strong data security systems and practices to protect confidential information from the wrong hands.

These systems and best practices include:

• Encryption Technology: Most Indian outsourcing providers protect data at rest and in transit using encryption technology in line with global security standards, like ISO 27001, SOC 2, and GDPR.

• VPN and Access Controls: Virtual private networks and role-based access ensure only relevant team members can handle sensitive AP/AR data to reduce the likelihood of data breaches.

• Multi-factor Authentication: Offshore AP/AR teams use software solutions built with multi-factor authentication systems that make it difficult for unauthorized persons to gain access.

The top ERP and AP/AR tools provide built-in invoice and payment approval workflows, including approval routing and audit trails, as well as payment run functionality.

Dashboards and reporting access for oversight

AP/AR dashboards enable you to monitor your offshore team’s performance and maintain control over their work schedule using dashboards and access to reports.

• Dashboards

Tools like SAP and NetSuite provide interactive dashboards that let you track invoice status, payment cycles, and day sales outstanding (DSO), and any other data you need to keep your firm compliant and profitable.

The dashboard can be tailored to show you the specific information you want to see at the time, such as vendor payment trends, AR aging reports, and cash flow forecasts.

• Reports

You can log into your outsourcing providers’ ERP system or AP/AR automation tools to run reports and export them (anytime you want) to spreadsheets or business intelligence tools for analysis.

You can also define the reports delivery frequency in your service-level agreement (SLA) to receive periodic reports from your outsourcing provider.

How Finsmart Accounting Supports Global AP/AR Operations

As far as India’s finance and accounting outsourcing providers are concerned, Finsmart Accounting stands tall among other offshore providers.

Founded in 2007 by a chartered accountant, the firm’s AP/AR services provide global companies with the MIS, financial statements, and global integration-ready reports that help them make informed decisions.

Here’s a bit of what it’s like to work with Finsmart Accounting:

Structured onboarding and kick-off process

Finsmart’s five-step onboarding process improves clarity across the board, enabling the team to understand your AP/AR needs and assign you the AP/AR experts that align with your processes, technology, and expectations.

The five-step onboarding process includes:

1. Talent Assignment: Certified AP/AR experts are assigned to your company.

2. Client Process Training: Train your assigned AP/AR team to understand your unique workflows and best practices. We document this training to enable us to train other AP/AR experts who may be assigned to you in the future.

3. Test Run Projects: Give our team a test project to verify their expertise in tasks like invoice processing, payment runs, and collections.

4. Review and Feedback: We work with you to review the results and opportunities to refine the processes and address any gaps.

5. Go Live: You’ll add our AP/AR team to your existing platforms and systems, such as workflow management, Slack, Microsoft Teams, etc.

SLA-backed delivery and real-time updates

Our AP/AR services are regulated by well-defined Service Level Agreements (SLAs) to give you more visibility and control over your AP/AR processes and priorities, just like you would your in-house team.

Our SLAs define every aspect of the engagement, including:

• Guaranteed Timelines: Our AP/AR clerks strive to double your current speed in invoice processing, payment runs, and AR collections to reduce days sales outstanding.
• Quality Assurance: We use a multi-level review process, involving Account managers and senior supervisors, to ensure compliant and audit-ready records.
• Easy Replacements: With over 150 highly trained accounting professionals, your dedicated staff can easily be replaced in the event of a performance challenge. This time, we’ll use our initial documentation to train them on using your process.
• Dashboards and Reporting: Using SAP, NetSuite, and other ERP software solutions, our team provides real-time dashboards you can access anytime to track invoice status, payment cycles, and AR aging reports.
• Time Zone Advantage: India’s 4:30-9-hour time difference provides our clients with an overnight processing advantage, which delivers the tasks you assigned the previous day at the start of your next business day.
• Effective Communication: Our English-speaking AP/AR teams interact directly with our clients on Zoom, Slack, email, etc., ensuring clear communication and real-time collaboration where necessary.

Supporting CFO goals with scalable finance operations

Finsmart Accounting is not just a service provider. We are a trusted FinOps partner to CFOs, Controllers and other global finance leaders. With our AP/AR services, we help finance teams in global companies to improve cash flow visibility, reduce operational costs, and free internal teams for more strategic tasks.

When you sign up with Finsmart, you unlock three levels of AP/AR support. We’ll provide a dedicated professional and two senior supervisors at no additional charge.

That is:

• A Dedicated Account Manager: Completes daily accounting tasks as an extension of your team.
• An Engagement Manager: Oversees your dedicated account manager, ensuring smooth onboarding, improved performance, and quality service delivery.
• Senior Accounting Advisor: Steps in to provide expert guidance on complex matters and technical oversight whenever needed.

Our accounts payable and receivable experts are available to take pressure off your internal team today. Click here for a chance to work with us.