Delegating A/R is good for cash flow and good for customer relationships
To outsource accounts receivable or not to outsource? While many companies have the right intentions wanting to keep A/R in-house, there are several reasons why outsourcing is often the smartest route. Too often companies make the mistake of mismanaging credit and collections, which can lead to poor cash flow and poor customer relationships.
Save yourself a step and see why investing in an accounts receivables firm can pay off in dividends. When your business grows and cash flow increases, you’ll be even more relieved an outside party is managing your accounts.
Focus time and resources
When it comes to time and resources, much goes into managing accounts receivable: dealings with customer credit, timely collections, and juggling multiple accounts is often more than meets the eye.
Some business owners become shell-shocked when they realize the amount of time and energy that is required to manage A/R in-house, from hiring financial experts, to providing them with the cutting edge tools they need to succeed. By outsourcing this major task, your business can allot resources toward more pressing priorities like strategy and development.
Save money on staff
While many businesses would prefer to avoid yet another monthly vendor payment, outsourcing accounts receivable actually saves money in the long run. While hiring a good reputable accounting firm can be expensive, it’s still cheaper than hiring full-time staff, who require tools, resources, career development, and company benefits.
Accounting mistakes are costly, too. Accounts receivable firms make fewer mistakes as they are professionals with proven processes. Another important thing to note is that an outsourced A/R firm will also be liable in the event of a mistake — and not your company — which is priceless when it comes to customer relationships and your bottom line.
Save on labor costs
While most “paperwork” is digital these days, printed invoices are still very much a thing, especially in more traditional industries such as banking, law, the medical field, and real estate. Depending on the size of your business, printing invoices can be expensive— not to mention a waste of paper — and bulk postage adds up quickly as well. Outsourcing accounts receivable also means outsourcing this costly expense.
Increase cash flow
The biggest benefit of outsourcing accounts receivable is the increased cash flow, thanks to quicker collections — and the healthier the cash flow, the healthier your business. When an A/R firm handles business, they have proven methods of collecting more quickly.
Timely collections are important, and can make or break your business. According to some studies, the longer accounts are overdue, the less money the business will eventually recover.
When A/R is automated by professional accountants, businesses collect faster, making it easier to save money.
Manage credit efficiently
Many businesses play the guessing game when it comes to issuing customer credit, or worse, they go with their gut. An A/R firm has the resources to conduct lengthy background checks, including looking into payment histories. This knowledge makes it easy for them to tailor credit plans that make sense for each customer — and for your financials.
This high level of screening also cuts down on overdue or delinquent accounts, which contributes to clogged up cash flow.
Improve customer relationships
There’s a reason why people are told not to blame the messenger: no one likes the bearer of bad news. Collecting on accounts unfortunately can complicate customer relationships, especially when dealing with slow or delinquent accounts. Outsourcing this necessary duty lets you focus on serving the customer’s needs, while an outside firm can focus on your needs, which is quicker collections to boost your bottom line.
Your time is valuable. Outsource your accounts receivable to IBS, the A/R experts.
What’s your experience managing accounts receivable in-house vs. outsourcing these duties? Share your stories below!