No matter what business you’re in, accounts receivable is one of those facts of life. This vital task encompasses everything from assessing customers for credit or accounts, to collecting from customers who seem to have skipped out on their bills.
Many businesses struggle to manage the workload. Big businesses may find they have too many accounts to manage effectively; the work is time consuming and never ending. Smaller businesses may not have enough resources—including people and technology.
Outsourcing comes up frequently when it comes to managing this task effectively. Most people wonder if it’s worth outsourcing—or if they’d be better to keep the task in-house.
Accounts receivable is a time-consuming task. It doesn’t matter if your business is large or small; it takes time to assess potential customers for accounts and credit, to invoice them, to follow up on overdue invoices, and to process payment when the customer does pay. There’s also the issue of customers who complain about their bills or need adjustments.
In short, there’s a lot of work here. When it comes to the outsourcing vs. in-house debate, you need to consider how much time you have—and how much time you’re willing to devote to managing this task. Chances are you could be using your time to complete other, more important work. If so, outsourcing is likely the answer.
Unless you’re a fairly large firm, you likely don’t have someone dedicated to managing accounts; smaller companies often ask people to wear multiple hats, and this is one of the tasks that might fall to any number of people. While it’s an important—even vital—task for every business, asking virtually anyone under the sun to complete it often leads to chaos.
You might also ask if the people working on accounts receivable are being used in the most effective way. If your marketing manager is spending more time drawing up invoices, you have a problem.
One solution is to have a dedicated team to manage this task, but smaller businesses may not find this feasible. The situation becomes worse if the business is growing. Even large businesses struggle with this aspect of accounts receivable management.
In this case, it might be better to outsource. You get a dedicated team without breaking the bank on hiring another person or losing one of your valuable staff members. And, as your business grows, you can expand your team with relative ease.
Another barrier for in-house management is technology. Managing this task can be made easier by using the right tools. But those tools might represent an upgrade over what you’re currently using—or it might mean implementing an entirely new system. There’s the cost of the infrastructure itself—new computers, mobile apps, and so on—as well as the costs of retraining your team.
Many companies do the math and find it’s not worth the money to invest in new technology for their accounts receivable management, even if it would help them manage the task more effectively and efficiently.
Again, the solution to this conundrum is often outsourcing. By partnering with a third-party provider, you can access the latest technology, without creating additional overhead for your firm.
It all adds up: The time, personnel, and technology you use to manage accounts receivable in-house all has a cost, which adds to your operating budget. It could be the difference between profit and loss for some companies!
Many business owners realize they can cut costs and save money by moving this time-consuming task out of house. An in-house accounts receivable team might seem ideal, but for many companies, an outsourced team is actually more effective and cost efficient.