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Top 5 Benefits of Outsourcing Accounts Receivable

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Top 5 Benefits of Outsourcing Accounts Receivable

Accounts Receivables (AR), also known as debtors, are the dues from the clients or credit customers. According to Forbes, AR is one of the first business processes to be outsourced and also the one to dominate outsourced activities. In today’s ever changing global economy, most businesses aim to run leaner by outsourcing low priority business processes, so they can focus on more mission-critical operations and processes like research, marketing and product development. Effective management of AR is of immense importance as it increases cash flow and thereby leads to sound financial health, sustainability and flexibility of business.

Here are the top five benefits of outsourcing Accounts Receivable

Streamlines Billing and Payment Processes

By outsourcing accounts receivable, you get prompt access to dedicated automated payment services, which in turn will free up talent in your organization. You can put your employees’ time to better use and get them to help finish tasks that really matter to the organization.  Outsourcing helps streamlining the billing and other related processes and increase accuracy, timeliness and overall efficiency.

Reduces Administrative Overhead and Costs

When you outsource AR, you are essentially shifting the responsibility of hiring, training and maintaining AR team, and providing the required IT infrastructure to an outsourcing firm. This is sure to cut down on your administrative overheads on many fronts. Additionally, it also saves on costs because you no longer need to have an AR department within your organization; no need for equipment or office supplies for a non-existent team. You can utilize the money and time saved through outsourcing for improving your marketing, sales or research, and creating stronger relationship with your customers.

Gives you Control

According to some studies, if an account becomes 90 days overdue, there is a chance that the vendor company will receive only 73 cents on every dollar owed. It gets worse after 6 months of delinquency as that number drops to just 50 cents! As a business entity, you don’t have time to chase these default payers, however, if you outsource, it will be handled by an external team and save you the trouble while giving you the control over the business. When you hire a third party to handle your AR, you will get constant access to up-to-date data. For instance, instead of realizing too late that your cash flow is getting blocked or delayed, you will be able to make necessary changes much earlier to avoid the cash flow problem. That way you will not lose control of the AR and payments related processes either.

Integrated Collection System

Most outsourcing firms have adequate experience and expertise to effectively integrate all of your billing and payment collection processes. An integrated collection system makes it easier for businesses to optimize spend management and collection percentage. It also helps minimize damages caused due to overdue accounts.

Helps Refocus on the Necessities

Businesses need to grow and sustain the growth for longer periods. This requires a heavy focus on three key aspects of business strategy – customer service, marketing and R&D. Handling AR in-house is often time-consuming and takes away key staff from business-critical activities. It is also observed that the challenging nature of debt collection tends to lower employee morale when done in-house. By outsourcing AR, you can let your staff focus on critical growth activities that contribute to sustainable businesses and improving employee morale.

Improves Customer Interactions

Accounts receivables, though a routine part of your business operations, can become contentious at times. However, when you outsource AR, the third-party provider will ensure that you get quality service all the way through the process, be it a gentle reminder email or dealing with a customer that isn’t willing to pay his bill. Your provider will be there at every stage, ensuring the interactions your customers have with your brand are positive and promising.

Accounting can be complex, arduous, and extremely time-consuming for real estate companies, especially if they own a huge property portfolio. It is therefore, critical to ensure efficient transaction processing to facilitate smooth flow of cash. Team of experts at Springbord bring years of experience in managing day to day finance and accounting (F&A) activities and are uniquely qualified to support critical F&A functions.

Schedule a call today with our experts to optimize transaction processing and improve cash flow.

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