November 18, 2022

What is third-party billing?

Jump to sections
Spending made smarter
Easy-to-use cards, spend limits, approval flows, vendor payments —plus an average savings of 3.5%.
Get fresh finance insights, monthly
Time and money-saving tips,
straight to your inbox
Thanks for signing up
Oops! Something went wrong while submitting the form.

Billing and invoicing are daunting tasks for finance teams in many organizations. To free up time for more critical tasks, several companies outsource billing to a third party.  

In this guide, we’ll answer this critical question and many others that you might have about working with a third party to handle your billing.

What is third-party billing?

Third-party billing is a process where another company handles all invoicing and payment processes between a company and its customers and vendors. The work of a third-party billing company includes invoicing, payment, and other billing-related activities during the billing cycle.  

This form of billing is especially popular with health services, insurance companies, and other sectors where billing and payment collections are complex. The services offered by third party billing agencies vary based on company size and the complexity of the payment process.

Why do businesses use third-party billing?

Invoicing and payment processing are daunting, resource-intensive tasks. The complexity inherent in these processes pushes organizations to delegate their operations to a third party.

Here are four additional reasons why businesses outsource payments to a third-party provider.

Reduces costs

Outsourcing invoice processing is cost-effective. Companies don’t have to build expertise in a non-core business area or invest in internal technical infrastructure. The result is lower costs in the long run since companies do not have to worry about maintenance or hiring personnel.

Ensuring compliance with industry regulations

Payments are highly regulated, and it can be challenging to stay on top of regulations. Failure to comply with industry regulations may not only lead to hefty fines but also damage a company’s reputation. However, working with a third-party billing provider ensures compliance out-of-the-box, leading to greater confidence in the payment process.

Simplifying invoice collection

Keeping track of billing and invoicing and ensuring that customers pay on time can be time-consuming and expensive. A third-party provider simplifies the entire process by handling collections on a company’s behalf. This saves time and money.


Security and safety are paramount for every organization’s payment process. For example, most third party payment service providers in the healthcare industry are Health Insurance Portability and Accountability Act of 1996 (HIPAA) compliant.  

HIPAA is a federal law that protects sensitive patient health information from being disclosed without their consent. Failure to comply with HIPAA can lead to considerable fines.

Billing service providers across multiple industries offer a secure billing process that safeguards confidential data against malware attacks and other malicious actors.

Where third-party billing falls short

As with anything else, third-party billing has noteworthy downsides. Here’s where it falls short.

No control over your finances

While using a third-party billing provider frees up more time to work on more important tasks, you don’t have control over your finances. Delegating all your financial operations to another company is not something everyone wants.  

While third party providers are highly reliable, controlling your cash flow and payment acceptance is ideal. Thus, third party billing services tend to fall short in this regard.


Third-party billing services charge transaction fees and a host of other onboarding fees that might stretch your net margins. For companies of a certain size, bringing payments in-house makes more sense since the savings they realize from the lack of one-time fees justifies the expense of setting up infrastructure in-house.

An elegant alternative to third-party billing with Ramp  

Third-party billing companies come in various sizes and offer different kinds of services. Smaller service providers only tend to offer payment processing, while larger ones offer more complex, specialized billing-related services, such as consulting.

However, what if you could skip choosing a third party billing provider and use a solution that puts you in control? Ramp is a finance automation solution that can automatically pay bills without needing any third party interference.

Here’s what you can expect from Ramp.

Automate bill payments and save time

It’s no surprise that manually processing bills can take a great deal of time for the finance team. With Ramp, you can automate bill payments via credit card, ACH, check, or international wire. This means you’ll pay bills on time and free up time for more important tasks such as analyzing cash flow sinks.

Control spend

Ramp helps you control spending before it happens with real-time alerts. Set spending limits by merchant, category, team, or department and digitize your expense policy automatically.

Expense management

Expense management is easy with Ramp’s corporate card and expense analytics. You can track and manage your company’s expenses in one place with Ramp’s corporate card. The expense report allows your employees to create and submit expense reports without any hassle.

You can also use AI-powered receipt matching to simplify expense reimbursements. Automate accounting and other routine financial tasks to save time.

Track everything in one place

Unlike when outsourcing financial operations to a third party, you have total control over your finances with Ramp Vendor Management. This gives you a single view of all of your vendor details and contracts. Ramp actually tracks transactions against businesses paid by card and Bill Pay, which makes it easier to analyze your spend and discover new insights.

VP of Finance & Capital Markets, Ramp

Alex Song is the Head of Finance and Capital Markets at Ramp. Prior to joining Ramp in 2020, he spent more than a decade as a private credit and structured credit investor in the hedge fund industry, working at firms including Sculptor Capital Management, Crayhill Capital Management, Bain Capital, and Morgan Stanley. Alex holds two degrees from Stanford, in Biomechanical Engineering and in Economics. He also holds a Master of Business Administration from Harvard Business School. Alex is a CFA charterholder.


What are the benefits of using third-party billing companies?

Third-party billing companies help lower overhead costs, ensure compliance with industry regulations, and simplify invoice collection.

What are the problems with third-party billing transactions?

Using a third-party provider to process payments won’t give you control over your finances. Plus, you may incur additional costs that could affect your company’s bottom line via one-time fees and other hidden charges.

Does Ramp use third-party billing companies?

No, Ramp is a finance automation company that will not only ensure that your company pays bills on time but also help save time and money. It’s also far more secure compared to third-party billing services.

How Crossbeam saved $10K+ with Ramp Price Intelligence

“Right now, I text a group of colleagues and search online—but being able to know within a 5% variance that we are solid on pricing? That gives me peace of mind."
Matt Dougherty, Senior Director of Finance, Crossbeam

How Clearbit closed the books >60% faster with Ramp + NetSuite

“Before Ramp, our month-end close took approximately 10 days. Now it takes three to four days—it's unbelievable.”
Kay Coolican, Accounting Manager, Clearbit

How Ramp helped Webflow lay a foundation for sustained growth

“This product allows us to enable our employees to be full-time right away, Ramp allows us to onboard people quicker, it allows us to get them the tools they need, which in many cases they need to be able to spend in order to grow.”
Ivan Makarov

How Candid expanded internationally with Ramp

“Ramp found over $250,000 in savings right out of the gate. That is far more valuable than any points program.”
Nick Greenfield, CEO, Candid

How FirstBlood’s switch to Ramp sped up their monthly close

“If I code one transaction with a certain vendor, Ramp knows. It makes suggestions based on past transactions. It just works.”
Kyle Potter, CFO, FirstBlood

How Elementus overhauled its spend management with Ramp

“The fact that I can have an expense, match it with a receipt immediately, upload it, and then integrate it into QuickBooks is a godsend.”
Matt Austin, Vice President of Operations, Elementus

How Eight Sleep consolidated their finance stack and launched a new product with Ramp

“Identifying the invoice, finding it in Ramp Bill Pay, and flexing it from there, takes all of one minute…it’s only a few clicks and you’re done.”
Irish Rose, Controller, Eight Sleep

Time is money. Save both.

Powerful cards with unlimited 1.5% cashback
Error Message
No personal credit checks or founder guarantee
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
No, thank you