Are you among 60% of businesses whose cash flow is negatively impacted by late payments?
Recent surveys highlight how overdue payments detrimentally affect business sales, underscoring the necessity for effective accounts receivable management strategies. Impressively, businesses that enhance their receivables management report a 30% increase in sales and reduce bad debts to zero.
However, here lies a significant challenge - Over 50% of businesses are uncertain when to outsource. Does this uncertainty resonate with you? If so, you're in the right place. This blog sheds light on the 5 major signs of why you should avail account receivable outsourcing services.
So, without much ado, let's get into the details.
Glimpse Of Account Receivable Outsourcing
Account receivable outsourcing is the process of connecting with experts to manage business accounts and keep track of cash inflows and outflows. Generally, businesses use this strategic approach to reduce workload and run operations smoothly.
Regardless of size or growth, preparing invoices, cash application deductions, and managing credit sales are go-to activities for every business type. This results in endless sales and cash transactions, deciding the revenue stream's path. Account receivable outsourcing works as a guide to reach the path without blockage.
What’s more? A transparent relationship has been formed among businesses and accounts receivables experts, resulting in financial management and a wealth of knowledge and understanding of clients’ needs.
Let’s see what account receivable outsourcing brings to your business one by one:
- A package of credit management, automation, invoice processing, resolving disputes, and record-keeping services.
- Timely updates on outstanding payments, financial trends, and forecasting for long-term monetary gains.
- Resume delays! Use pro techniques to settle payments promptly with customers, business partners, or stakeholders while maintaining positive relationships with them.
- Replace your in-house accounting! Don’t hustle to delegate tasks to manage invoices when AR outsourcing covers everything.
- Records are kept secure! When invoices are settled, assets and liabilities are sorted in cash flows, and there are zero overdue; hence, recordkeeping becomes much simpler.
5 Signs Your Business Needs Account Receivable Outsourcing Services
Are you making frequent invoice errors that impact your customer relationship or delay payments? This could be a sign that you need expert assistance. Well, this is just one from the list; there are ample reasons that could indicate why you should connect with industry experts right away rather than struggling with everything all alone.
1. Spending More Time On Accounting Processes
Are you juggling with time-consuming accounting processes? Is it hampering your work productivity? Well, you aren’t the only one. Most business owners find accounting a tedious and time-consuming task, which causes them to lose focus on crucial business areas, leading to a 40% downfall in productivity.
Therefore, your efforts are more required when dealing with important clients, so it’s time to let professionals manage your accounts well. You’ll get payment collection, tax management, credit regulation, and every accounting service managed while outsourcing. It aligns with your business needs & accounting standards and saves you much time and effort for business growth.
2. Not Focusing on Administrative Functions
Businesses should focus on what matters most to ensure growth and success. Marketing, research, development, and production functions are key contributors to taking the business to the next level, and you should focus on it.
Are you stuck with cash flow settlement, credit enrollments, or payment shortcomings due to which you couldn’t focus on your administrative tasks? To overcome such a challenging situation, make a plan to streamline the process while calling in experts for accounting needs.
With an AR outsourcing presence, you can get off with complex payment collection methods and the hustle of bookkeeping. These well-managed accounts could relieve stress and keep you focused on administrative functions, leading to rapid growth.
3. Frequent Errors In Invoicing
Errors in invoices—that’s a BIG issue! Ignoring invoices with missing data, miscalculations in tax applications, absence of due dates, or incorrect information would be risky.
You might be wondering why transactions are still not processed and where the mistakes lie in your invoicing management systems. Data entry errors, double payment records, or missing information might occur. All such situations lead to invoicing errors. What next? Unfortunately, your payments will be delayed.
If it happens frequently, you could seek professional help or AR services to make your accounts, books, and IMS system error-free! Outsourcing experts have advanced technology and systems that promise accuracy and consistency in invoicing. Hence, errors will disappear, leveraging the client’s trust.
4. Cash Flow Problems
We have seen businesses where a tech startup launches a new software product or a mid-sized retailer experiences a sales boom. In such scenarios, their cash outflows exceed their cash inflows, which creates severe business problems.
Like what? Dealing with fund shortages or covering their financial obligations! Even your insufficient cash reserves do not allow inventory management or debt repayment. This indicates why your business should retain funding when needed the most.
Indeed, it is possible to monitor cash flow problems through outsourcing accounts receivable management services. Third-party personnel have years of experience structuring things, including projecting cash reserves, reviewing your billing cycle, requesting payments, and improving your funding.
5. Adding More In-house Expertise
Are you still looking for experts on the in-house accounting team? What if we told you that we’ve got you some cost-effective and better options?
Only a few businesses are fortunate to get a team of financial experts within their desired budget, and the rest struggle to onboard the best ones. Finding one specialized employee is not easy, though. It’s been a time-consuming process that has burdened the hiring cost.
Then why pay more? When salaries, bonuses, training, and technology costs add to your overhead costs. Outsourcing can significantly reduce these, but how? Just pay for the services you need and make smart budget planning.
Pros & Cons Of Account Receivable Outsourcing
Here's a table outlining the good and bad of accounts receivable outsourcing:
| Pros | Cons |
Savings: Cost saving is a great advantage of outsourcing account receivables. The funds will be kept secure from hiring new employees or ongoing maintenance and improvements. Expertise: Experts manage the accounts closely, adding great knowledge to the business. Outsourcing these professionals gives you a competitive edge and generates word of mouth among customers. Flexibility: Company needs are never sacrificed when maintaining account receivables. Outsourcing partners give the flexibility to scale up or down the business without many interruptions. Decreased errors: Outsourcing companies can drastically cut errors in the accounts receivable process. Automated procedures and specialized software are role models here. Time-saving: Focusing on business core competencies, such as outsourcing accounts receivable, can increase overall productivity and efficiency. | Loss of control: A company might lose direct access to the data when it outsources accounts receivable. Communication errors: When outsourced from other regions and not similar to your time zone, having different cultural norms (language or ethics) can lead to communication problems. Security concerns: Business information is sensitive. Business data might be compromised if it is accidentally handed into the wrong hands. Dependency: Obtaining accounts receivable services may create dependency on third parties. It would be challenging to return to an internal procedure when necessary. Time-taking Results: Dealing with an outsourcing party might take time to get the desired results. |
These are the major pros and cons of accounts receivable outsourcing. What if we tell you that you can overcome these cons by outsourcing to the right partner? Yes, you read it right. FBSPL, a leading receivable outsourcing services provider, can help you overcome these cons as we follow a transparent communication process, take care of security, and ensure timely delivery.
Make The Most Out of Account Receivable Outsourcing
Hold on! It’s not the end of why your business needs account receivable outsourcing. Many more added benefits await you to extract the maximum value for your business. Have a look here:
1. Save Operating Costs, Save Bucks
Operating costs rise when you pay for employees' salaries and training. The more you hire people, the more resources, space, equipment, and infrastructure you need.
Outsourcing accounts receivable management services can reduce these operations costs to some extent! Small business owners who can’t afford to have a crowded accounting team can hire one third-party personnel for all their accounting needs. What’s better than such ease in cost saving without sacrificing business operations?
2. Goodbye To Day Sales Outstanding (DSO)
Has it ever happened that the number of sales you make is unequal to the number of payments you receive in a day? This DSO situation is where your cash is stuck among unpaid invoices because your team can’t settle invoices daily.
Accounts receivable outsourcing benefits you with timely and accurate invoicing. Their polite but convincing communication strategies work as a reminder to recover the payments faster and decrease DSO.
All these are done without any disputes; the professionals settle them all by correcting errors, addressing the client’s concerns, and negotiating better.
3. Expertise At Your Fingertips
It’s true! Every business seeks expert knowledge to tap into the competitive business world.
Accounting is one such department that needs expert supervision to get everything done without mistakes and disputes. Outsourcing gives you access to these experts with years of experience in bookkeeping, credit management, accounting software, and locating errors. These functions are performed with attention to detail and keeping good client relationships.
4. Win Your Customers
Customers are very fond of quick customer service, professional management, and timely delivery of their products and services. This has to be an opportunity for your business to impress existing customers and attract new ones.
Account receivable outsourcing partners help impress your customers with their professional behavior and solve payment and credit issues. With their utmost communication and management skills, your customers get value in being a part of your company. It’s a win-win situation for both parties.
5. Automation At Its Best
AI automation has changed the concept of business lookout!
Traditionally, businesses do several recurring tasks, which take time and effort. But modern problems require modern solutions with AI. One of the perks of outsourcing is getting access to automation tools. Reducing manual errors in accounts receivable is exciting for businesses.
Your customers get auto-generated reminders for payments and professional assistance within seconds. It reduces the repetition of tasks within the company and enhances productivity.
6. Plan Your Next Big Business Move
Generally, companies are stuck with huge operations functions and time to plan for expansion.
Planning is a business's primary function, so don’t stop planning to invest in new projects, launch new products, or implement new marketing tactics.
Meanwhile, Account receivable outsourcing will improve a firm’s financial health and provide the latest updates about finance trends. Working collectively will do wonders for your business, helping you gain profits and achieve new goals.
Choose The Right Account Receivable Outsourcing Partner
Recognizing the need for accounts receivable outsourcing is essential to ensure financial stability and operational efficiency. If your business is experiencing delayed payments, strained customer relationships, or lack expertise, accounts receivable management services can be your savior. The experts will help you streamline the receivables process, improve customer relationships, streamline cash flows, and allow your team to focus on the core business activities.
Hence, choosing a reliable accounts receivable outsourcing partner is a must. At FBSPL, we have a team of dedicated outsourcing service providers who help you automate accounts receivable while ensuring accuracy and precision. Connect with our experts now!
