Invoice Exceptions Are a Problem No More, Thanks to Accounts Payable Outsourcing

Accounts payable (AP) is one of those business functions that rarely gets attention—until it becomes a problem. And for many enterprises, the biggest problem in AP is invoice exceptions. 

Whether it’s missing purchase orders, mismatched data, unauthorized invoices, or duplicate submissions, invoice exceptions clog workflows, delay payments, and consume valuable time of finance and procurement teams.

But there’s a strategic solution that goes beyond patching processes: accounts payable outsourcing. Done right, outsourcing doesn’t just shift the burden elsewhere—it transforms how exceptions are prevented, handled, and ultimately eliminated.

The Exception Dilemma

Invoice exceptions are a silent killer of AP performance. They don’t just slow things down—they cascade across departments:

• Delays in approvals lead to late payments.
• Disputes with vendors hurt relationships and lead to duplicate submissions.
• Unmatched POs or receipts stall workflows.
• Manual intervention eats up team bandwidth.
• Missed discounts and penalties increase costs.

The result? A function that should be routine becomes unpredictable and reactive.

The Data Behind the Problem 

According to the Procurement Metrics That Matter in 2024 report from Ardent Partners and GEP, the pain of exceptions is systemic:

• Only 63.4% of spend is contract-compliant—meaning a third of payments aren’t clearly tied to negotiated terms. This is fertile ground for exceptions.
• Just 45.8% of suppliers are digitally enabled (compared to 60.2% for best-in-class per-formers), which significantly increases the chance of receiving invoices in non-standard formats that can’t be processed straight-through.
• Only 40% of procurement organizations use ePayables/AP automation tools , limit-ing the ability to flag and resolve errors at the source.

Put simply: when AP processes are manual, disconnected, or under-automated, exceptions aren’t an anomaly—they’re the norm.

Why In-House Fixes Fall Short

Organizations often try to tackle invoice exceptions with in-house solutions:

• Training more staff
• Revising policies
• Requiring stricter PO usage
• Patching together software tools

But these efforts rarely scale. Exceptions occur at multiple points—supplier onboarding, procurement, receiving, and payment—and solving them requires synchronized workflows, smart validation, and proactive data control. Most internal AP teams are too buried in backlogs to fix the upstream issues that cause exceptions in the first place.

The Outsourcing Advantage

AP outsourcing directly addresses the root causes of the exception dilemma—not just the symptoms. Here’s how:

1. Standardization of Inputs

Outsourcing partners don’t just process what you send—they enforce structure. From the moment an invoice enters the system, it goes through pre-defined validation checks. Missing PO? Wrong format? Duplicate submission? The system flags it before it gets into the approval flow.

By routing all supplier invoices through a centralized, standardized intake process, outsourcing reduces the chaotic diversity of inputs that create exception overload.

2. Digitally Enabled Supplier Management

According to the abovementioned report, best-in-class performers have 60.2% of their suppliers digitally enabled, compared to 45.8% for the average. This digital enable-ment—using portals, e-invoicing platforms, or punchout catalogs—dramatically reduces exceptions because invoices arrive clean, structured, and matched to the right PO or contract.

Most AP outsourcing providers include digital supplier onboarding and enablement as part of their service. This creates consistent invoice quality, reduces manual entry, and eliminates data mismatch at the source.

3. Automated Matching and Smart Exception Routing

Invoice exceptions can’t be fully eliminated—but they can be managed intelligently. Leading AP outsourcing solutions include:

• 3-way matching engines to link POs, invoices, and receipts
• AI-driven pattern recognition to flag anomalies
• Rules-based workflows that route exceptions to the right approver instantly

This automation shrinks the exception handling time dramatically, moving problems from “backlog” to “real-time triage.”

4. Tighter Contract and Spend Alignment

The report notes that average contract compliance is only 63.4%. That means nearly 4 in 10 payments could be disconnected from agreed-upon terms. This opens the door to payment disputes and missed controls.

Outsourcing partners bring more than processing—they bring governance. By linking invoices to sourcing systems and contract repositories, they help ensure payments are made only when matched to agreed terms—reducing maverick spend and unauthorized invoices.

5. Clear Metrics and Continuous Improvement 

In many organizations, exception handling is opaque—problems are resolved, but root causes remain hidden. Outsourced AP operations, on the other hand, provide:

• Dashboards showing exception volumes by cause
• KPIs on resolution times and vendor performance
• Feedback loops that inform procurement and vendor management

This data turns exception management into a strategic function, not just firefighting.

Also Read: Why Packaging Procurement is Complex (And 3 Strategies to Succeed in 2025) 

Strategic Impact: Beyond the Back Office

Why does any of this matter to leadership? Because solving invoice exceptions at scale creates real financial and operational value:

• Faster cycle times: With fewer exceptions, invoices move faster, unlocking early pay-ment discounts and improving working capital visibility.
• Improved supplier experience: Vendors appreciate predictable payments and fewer disputes—strengthening relationships and negotiating power.
• Reduced cost to serve: Exception handling is expensive. By reducing manual inter-vention, you reduce AP headcount pressure and reallocate staff to more strategic roles.
• Stronger audit trails and risk controls: Automated exception workflows capture every touch, change, and resolution step—essential for compliance and audit-readiness.

Is Your AP Process Ready? 

You don’t have to wait for a major disruption to rethink AP. Here are signs that invoice exceptions are hurting your bottom line:

• High volume of supplier queries about payment status
• Frequent invoice rejections or rerouting
• Delayed month-end closings due to unresolved invoices
• A backlog of unmatched POs
• Increasing friction between procurement and finance teams

If any of these apply, outsourcing AP may be the breakthrough you need.

How to Choose the Right Partner  

While outsourcing accounts payable, look for a provider that offers:

• Structured invoice intake (OCR, portals, e-invoicing)
• Supplier enablement services
• Embedded analytics and exception root cause reporting
• Integration with your ERP and sourcing tools
• SLA-based resolution timelines and transparency
• Data Security and Compliance 

Most importantly, find a partner that understands procurement—not just finance. Invoice exceptions are often procurement problems in disguise.

Why AP Outsourcing Makes Business Sense

Invoice exceptions are not a minor annoyance. They are a structural inefficiency that bleeds time, money, and trust. AP outsourcing solves this by combining standardization, automation, digital supplier engagement, and continuous feedback.

As CPOs push harder for cost savings, working capital control, and better vendor performance, there is a strong case for outsourcing AP. This isn't just about saving money—it’s about getting control of a process that has long resisted improvement.

Explore GEP’s accounts payable services