Accounts payable outsourcing for healthcare providers in the UK should be a go-to strategy for most providers. This is not just backed by data and numbers but by the growing number of healthcare companies that are now looking to offshore their AP tasks. What’s more, healthcare accounts payable outsourcing service providers have also evolved over time. What started as a generalist accounting service that was done by an outside vendor, has now led to specialists in the various fields of accounting.
This undoubtedly includes the healthcare sector. The trick is to find an outsourcing provider who has expertise in the area with plenty of case studies under their belt.
In this blog, we will discuss the ins and outs of outsourcing accounts payable for healthcare providers. This will invariably help them choose a provider who is truly proficient in the field.
What is Accounts Payable in the UK Healthcare Sector Context?
While accounts payable remain consistently the same, regardless of the country where it is being accounted for. In the UK, there are specific mandates that should be factored in.
The healthcare industry is regulated by strict compliance and transparency laws, resulting in invoices being higher than average in volumes. These invoices are then codified for the NHS to calculate profit margins. This involves adhering to payment standards where relevant, compliance with UK VAT rules and meeting audit and reporting obligations where necessary. Accountants also need to be aware of UK GDPR guidelines when handling sensitive financial and supplier data.
Errors in invoice processing or delayed payments can result in severe penalties, audit issues, or complicating the relations with suppliers.
What Is Accounts Payable Outsourcing?
Accounts payable outsourcing generally involves moving the AP task to an outside entity of specialist accountants. As a requirement, the outsourcing provider ensures that their clients remain compliant and within on time with their reporting. This helps accounting practices save time and enables the entities to focus on strategic operations and advisory services.
Challenges of Accounts Payable Outsourcing for Healthcare
Accounts payable present a range of challenges for healthcare providers. These challenges can be overcome while outsourcing to a specialist AP partner. Here is a list of challenges that healthcare providers that accounting practices must be aware of:
High Invoice Volumes and Various Suppliers
Healthcare providers are prone to high volumes of invoices from various suppliers, requiring more resources. Handling the high volume of invoices from different suppliers can take a lot of time in processing, resulting in delays and errors.
Manual and Scattered Processes
A lot of healthcare providers depend on manual or semi-automated AP processes. Paper invoices, email-based approvals, and disconnected systems can slow down the processing, decrease visibility, and increase the work pressure of healthcare providers. Thus, it can badly affect the working of healthcare providers.
Data Security and Confidentiality Concerns
The healthcare providers handle very sensitive client information, but a lot of healthcare providers depend on manual or semi-automated AP processes. This leads to an extremely high risk of data security. Additionally, protection against data breaches and complying with the UK GDPR increases the complexity as well as cost.
Pressure Of Making Timely Payments
Paying suppliers on time is very important in healthcare. It makes sure that there is an uninterrupted and regular supply of necessary goods and services. Paying late can badly affect relations with suppliers, affect the delivery of services, and can also lead to supply shortages.
Value Added Taxes
The UK healthcare providers have to comply with the complex VAT rules. It includes partial exemption and zero-rated or exempt supplies. It is important to correctly identify VAT treatment. In case of inability to do this, it can result in compliance issues, audit findings, and financial exposure. It is important for healthcare providers to comply with other regulatory requirements. These tasks need expertise so that penalties and any other risks can be avoided.
Complex Approval Workflows
Healthcare Accounts Payable usually has various approval workflows. These approval layers are across departments, clinical units, and budget holders. These complex workflows can result in late payments to the supplier and thus affect the relations with suppliers.
Benefits of Accounts Payable Outsourcing for Healthcare Providers
The following section lists the benefits that accounting practices can expect from an outsourcing service provider:
Faster and More Reliable Supplier Payments
It is of extreme importance to pay the supplier on time, especially for healthcare entities. Outsourced Accounts Payable providers can handle large numbers of invoices efficiently and effectively. These providers combine digital automation technologies with compliant, specialised, and scalable staffing models.
The providers shift AP from a manual workflow to an electronic process. This leads to saving time, which helps with faster payment to the supplier. This helps accounting practices receive organised databases for faster turnaround time for reconciliation.
Efficient supplier payments help reduce disputes with suppliers. They also reduce operational disruption, which can happen due to disputes with suppliers. In this way, medical AP outsourcing providers ensure that accounting practices can improve cash flow.
Improved VAT and Tax Compliance
VAT and tax compliance is a complicated process in UK healthcare due to various factors coming in. Medical AP outsourcing providers bring professional staff who are experts in tax compliance. The providers make sure that the invoices are reviewed, validated, and coded correctly in relation to the HMRC requirements. They make sure to provide real-time reporting. This helps in decreasing errors in VAT returns and reduces the risk of penalties.
Accuracy in VAT returns and tax compliance makes financial statements reliable. This helps the healthcare entities maintain high standards of financial compliance.
Reduce the Administrative Burden for Finance Teams
The medical AP outsourcing providers reduce the administrative burden of finance teams. The outsourcing providers do time-consuming and repetitive tasks like invoice processing, data-entry, and more. Thus, they reduce the burden from in-house accounting teams. This allows financial teams to focus on strategic financial management, budget management, and support clinical and operational leaders.
Improves Accuracy and Standardisation
Outsourcing providers use standardised processes, proper systems, and validation checks to ensure error-free invoice processes. This is especially important for accounts payable outsourcing for healthcare providers UK. It is because inconsistent practices can lead to mistakes and can affect relationships with suppliers. Improved accuracy and standardisation can reduce supplier queries and reduce rework. It also ensures that the financial record is reliable.
Increases Data Security and Regulatory Compliance
As accounts payable in healthcare entities have sensitive suppliers and financial information, outsourcing providers help them in increasing data security. Outsourcing providers use strong information security controls, proper data-handling procedures, and restricted system access to increase data security.
The providers use platforms that adhere to NHS security standards, GDPR, and ISO27001. Outsourcing providers reduce the risk of data breaches through automated invoice processing. It decreases manual errors and fraud while ensuring strict adherence to financial and data protection regulations.
Cost Efficiency
Healthcare accounts payable outsourcing converts fixed costs into a predictable service cost for the healthcare entities. Outsourcing providers gain cost efficiency by reducing overheads and optimising cash flow management. It significantly reduces the cost of recruitment, training, additional staff, and overtime. Clear pricing models improve cost transparency. This results in better financial planning.
Conclusion
Outsourcing accounts payable to an accounting practice offers a unique and all-encompassing solution to managing finance processes. A practice can partner with a specialist service provider to obtain additional resources and expertise in managing payable tasks.
Healthcare accounts payable outsourcing will enable the accounting practice to provide more efficient support to its clients in specific industries, especially healthcare, which relies heavily upon accurate and timely payments. Furthermore, the outsourcing arrangement will permit the accounting practice to devote more time and energy to providing more strategic financial consulting services while guaranteeing that routine payable processes will be performed accurately and efficiently by a group of professionals who specialise in performing that function.
