All businesses want the same things from a financial transaction: high quality, low cost, excellent security, and the best possible information to feed into forecasts. Their goal, across the board, is to make the processing of payables and receivables as efficient and effective as possible. That's why many organizations are turning to business process outsourcing (BPO) providers. When outsourcing the processing of financial transactions, however, businesses need to guard against potential pitfalls 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 outsourcing arrangement to protect itself is to request service-level agreements (SLAs) from its outsourcing providers. An SLA is rooted in the concept of “warranty,” a common understanding about services, priorities, and responsibilities. It's a promise that the BPO provider is going to give its customer what it is supposed to provide.

SLAs can be baked into an organization's primary contract with its BPO provider. They can be an addendum to the contract, or they can be separate legally binding contracts that specify consequences for failure to meet their targets. Even if it's not technically called a “contract,” an SLA has the force of a contract if it has all the components of a contract: offer and acceptance, capable parties, and considerations, as part of a legal enterprise.