Farrell says outsourcing business processes such as payroll and accounts can seem like a big investment but overall proves cash positive in the first couple of years. "The cost is initially carried by the outsource provider, and funded through the cost reductions," he says.
According to Stuart Dickinson, marketing and communications manager at SAP solutions company Oxygen, there are a couple of prerequisites when it comes to outsourcing your payroll or accounts function. Dickinson says it is predominantly organisations with relatively large volume invoices coming in each month that outsource their accounts.
"Firstly, there are those organisations with huge requirements, we are talking about hundreds of thousands of invoices," says Dickinson. "Secondly, there are organisations that have already made the decision to centralise their financial and banking operations. It's hard to outsource the accounts function if it is done individually by each business unit," adds.
For it to work, says Dickinson, it is important for a company to have its core financial systems running across a company rather than "55 different finance applications".
Companies looking to outsource these functions do it because they cannot do it efficiently or cost effectively in-house and want to get process improvements. A company like Oxygen, says Dickinson, also offers what he calls an "enhancement contract," which means it not only takes over the accounts payable system of a company but also, overtime, it reengineers it and implements its own solution over the top of it.
"With our system the analysis function, the data scraping and the punching of data happens automatically, leaving the customer to focus on resolving issues, ensuring accuracy and auditing," he says.
Carter Holt Harvey, a forest product company which employs 10,400 people in 150 different offices across New Zealand, Australia, Fiji, Asia, and South America, claims to have saved seven percent on costs year on year since April 2001 when it first automated its accounts payable system using Oxygen's systems.
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