Done right, outsourcing accounts payable (AP) takes a time-consuming task off your plate, lowers your processing costs, and gives you clearer visibility into cash flow. Done wrong, it can leave you paying high fees, getting poor service, and damaging the vendor relationships your business depends on.
Here at Relay, we work with business owners and their outsourced accountants to automate accounts payable inside banking, so we've seen plenty of AP outsourcing go right and go wrong. We're sharing what we've learned below, so you can spot the common pitfalls and avoid them.
What it means to outsource accounts payable
Outsourcing accounts payable means hiring a third party to handle the bills inside your business. The scope of work can vary widely. An outsourced AP department could take on just one part of the AP cycle (invoice intake, invoice processing, approval workflows, or payments), or they can take everything off your plate.
It depends on your goals and how much you want to hand off. Here are your options.
What are your AP outsourcing options?
First, let's clear up a common misconception: "AP outsourcing" doesn't just mean sending the work overseas. While that might be common practice for some enterprise companies, it's far from the best option for small businesses.
For a small business with a lot of moving parts, it's actually preferable to outsource accounts payable to an accounting or bookkeeping firm—often the same one that already manages monthly bookkeeping. In fact, 37% of small businesses are actively seeking their accountant's help managing bill payments.
With that out of the way, here are your options for AP outsourcing:
Overseas companies. A lot of companies promise to streamline your AP with low-cost overseas labor. Lower overhead is an attractive selling point, but it's also risky, especially if you have critical vendor relationships.
Technology. As long as the AP work gets done, does it matter if software does it? The trick is finding AP software that fits your needs and budget.
An accountant or bookkeeper. As mentioned above, this is likely the best approach for small businesses—especially if you already have a trusted relationship with an accounting or bookkeeping firm. Their experience managing your finances means they can expand into AP much faster.
In short, if you're a small business, look for an accountant or bookkeeper to outsource your AP, whereas enterprise businesses may send that work overseas. In both cases, you'll want to incorporate technology into your AP process.
How much does it cost to outsource accounts payable?
Outsourced AP is usually priced one of three ways: a per-invoice fee, a flat monthly retainer, or a dedicated-staff (FTE) rate. Per-invoice pricing for standard processing commonly runs a few dollars per invoice, and a flat monthly retainer for a small business handling roughly 50 to 500 invoices a month typically lands in the hundreds to low thousands of dollars per month. What you actually pay depends on your invoice volume, how complex your bills are, and how much of the workflow you hand over—so get a quote based on your real monthly volume, not a headline rate.
The number worth knowing before you shop is what it costs you to process an invoice in-house today. That's the benchmark any outsourced or automated option should beat, and we break it down in the cost section below.
4 pitfalls when outsourcing AP
Before you hand it off, it's worth knowing the problems you're most likely to face. Knowing these pitfalls will help you avoid them.
1. Failing to document your current process
One of the worst ways to outsource AP is to dump the entire process onto your vendor and let them run with it. After all, they're the experts, so they'll fix what's broken and keep what's working, right?
Outsourced AP vendors need your help understanding exactly what's working and what isn't. Nobody except you understands the nuances behind each vendor relationship. Once outsourced, critical details may get lost and relationships may be damaged.
To get around this, clearly document your entire AP process before you outsource. In fact, your outsourced AP partner should be actively helping you do this before taking on any of the work.
2. Not vetting your AP service vendor
We've all been there. You get sold on someone who looks great on paper, even has good references, but you still somehow end up with low-quality work.
Apart from doing your due diligence, there are a few additional ways to avoid low service quality:
Start with a pilot project that's limited in scope and time.
Have the vendor take over just one part of the AP process.
Have the AP vendor start with just a portion of invoices at first.
Most importantly, never start an engagement without a clear Service Level Agreement (SLA) in place. Your SLA should outline things like expected processing times, response times, and what happens when there are disputes.
3. Failing to set communication expectations
When you reach out to an external vendor, you're not always going to get an immediate response.
But sometimes payables are time-sensitive, so a lag in communication could affect how quickly you address AP concerns or mistakes. An SLA that outlines response times can help—but it may be even better to set regular, recurring meetings to review the AP process and raise issues ahead of time.
4. Sensitive payment data leaks
When you outsource AP, you hand a lot of highly sensitive information to a third party: payment details, vendor information, and behavior patterns. If any of that data is breached, it can be used to damage your business—fraudsters can use it to impersonate your business or your vendors.
To minimize this risk, get clarity from your outsourced AP vendor about how they protect your data and what internal controls they have in place to prevent breaches.
Biggest underlying mistake: outsourcing for the wrong reasons
A lot of issues with AP arise when outsourcing is done for the wrong reasons or without clear goals in mind. Below, we'll help you decide if it's a good option by looking at some of the best reasons to outsource AP.
Benefits of outsourcing accounts payable
The biggest benefits of outsourcing AP include taking administrative work off your plate, improving financial processes, and getting more clarity into your cash flow. Here's a closer look at the best reasons to outsource.
Outsourced AP frees up time to focus on strategic work
It isn't unusual for the person who manages your bill payments—whether it's you or your office administrator—to be overwhelmed with administrative AP tasks. And whenever new vendors are added or AP mistakes happen, your attention is taken away from mission-critical work.
By outsourcing, you entrust the process to experts who can handle AP more efficiently, freeing you to focus on more strategic work.
Outsourced AP lowers your invoice processing costs
With a manual process, the average company spends about $9.40 to process a single invoice and takes 9.2 days to do it. A slow, inefficient process can strain your vendor relationships—which are crucial for small businesses.
By combining AP outsourcing with automation, you can make big improvements. Best-in-class teams get their cost down to about $2.78 per invoice and their processing time down to 3.1 days, and they cut their invoice exception rate from an average of 22% to just 9%.
Your vendors can recommend a better AP process
For many smaller companies that run AP in-house, the team managing that process also juggles other responsibilities. That usually means nobody dedicates their full attention to improving the AP process.
A third-party team that manages AP for other companies will have the tools to make the process faster and more efficient. If you're a small business that works with an accounting or bookkeeping firm, chances are your firm has a deep understanding of the latest AP technologies and best practices.
Relying on their expertise leads to big gains in efficiency, faster.
You get better reporting with outsourced AP
This isn't to say you can't get great reporting while managing AP in-house. But you're more likely to get good reports in place because many AP outsourcing providers offer reporting as part of their management fee.
These reports give you a clearer picture of how much you're spending per invoice, how long it takes to make payments, and other vendor-management metrics you can use to improve your business.
Tips for outsourcing AP
If outsourcing your AP process is the right way to go, there are a number of things you can do to find the right partner.
Take time to research your options
If you're truly struggling with your AP process, you may be tempted to rush into signing with a new vendor. Don't be too hasty. There are a lot of vendors willing to take on your AP function, but not all of them will make sense for your business. It's worth spending the time to find a partner that really delivers on the benefits above.
Prepare yourself for the change
Once you've chosen the right vendor, make sure you're ready to work with them. Get a sense of what their process will look like, talk to anyone on your team who may need to be involved, and make sure you're available when needed to keep the process moving. A few things to keep in mind:
Map out your existing AP process.
Have a Service Level Agreement in place.
Establish communication expectations ahead of time.
Start with a pilot project.
Align expectations and scope of work
Have early conversations with your vendor to set expectations around what parts of the AP workflow they'll take on—whether that includes invoice receipt, invoice processing, invoice approvals, and payment processing. This scope of work should be outlined clearly in their statement of work and will help you understand your role in the relationship. It will also help you keep them accountable and connect the dots between their performance and what they're billing you.
Going further: automate accounts payable with Relay
Outsourcing and automation go hand in hand. Whatever outsourcing vendor you choose will bring in technology to make the process more efficient.
As you narrow down your options, Relay can be the banking layer underneath. Relay's money management platform lets you collaborate with your outsourced AP team while cutting the administrative work of paying bills—with auto-imported bills from QuickBooks Online and Xero, multi-step approval workflows so the right person signs off before money moves, and batch vendor payments. Open a Relay account to keep AP visible while someone else runs it.
Frequently asked questions
How much does it cost to outsource accounts payable?
Outsourced AP is typically priced per invoice, as a flat monthly retainer, or as a dedicated-staff rate. Per-invoice processing often runs a few dollars per invoice, and a small-business retainer commonly lands in the hundreds to low thousands of dollars per month depending on volume.
The most useful number is your in-house cost per invoice—about $9.40 on average, per Ardent Partners' 2025 benchmarks—since that's the figure an outsourced or automated process should beat.
Is outsourcing accounts payable worth it for a small business?
It can be, if your AP process is manual, slow, or pulling you away from higher-value work. Outsourcing—paired with automation—lowers cost per invoice and speeds up processing.
It's less likely to pay off if your invoice volume is low or your current process already runs smoothly and cheaply. Match the cost of a vendor against what you spend to process invoices in-house today.
What's the difference between outsourcing and automating accounts payable?
Outsourcing means handing the AP work to a third party, like an accounting or bookkeeping firm. Automation means using software to reduce the manual steps in AP—capturing invoices, routing approvals, and scheduling payments.
Most small businesses use both together: an outsourced partner running an automated workflow, which is where the biggest efficiency gains come from.
What should be in an accounts payable outsourcing agreement?
At minimum, a Service Level Agreement (SLA) that spells out expected processing times, response times, how disputes are handled, and how your payment and vendor data is protected.
Starting with a limited pilot and setting clear communication expectations up front further reduces the risk of poor service or a data breach.
