All businesses want the same things from a financialtransaction: high quality, low cost, excellent security, and thebest possible information to feed into forecasts. Their goal,across the board, is to make the processing of payables andreceivables as efficient and effective as possible. That's why manyorganizations are turning to business process outsourcing (BPO)providers. When outsourcing the processing of financialtransactions, however, businesses need to guard against potentialpitfalls that could result in disruption of internal processes,end-customer dissatisfaction, or even data-security breaches.

The best way for an organization entering into an outsourcingarrangement to protect itself is to request service-levelagreements (SLAs) from its outsourcing providers. An SLA is rootedin the concept of “warranty,” a common understanding aboutservices, priorities, and responsibilities. It's a promise that theBPO provider is going to give its customer what it is supposed toprovide.

SLAs can be baked into an organization's primary contract withits BPO provider. They can be an addendum to the contract, or theycan be separate legally binding contracts that specify consequencesfor failure to meet their targets. Even if it's not technicallycalled a “contract,” an SLA has the force of a contract if it hasall the components of a contract: offer and acceptance, capableparties, and considerations, as part of a legal enterprise.

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