Accounts Receivable Management Outsourcing: How it Can Help Your Business

Small business owners juggle many roles: sales, product development, customer service, marketing – not to mention bookkeeping and accounts management.  Outsourcing management of payables makes good business sense for many business owners.  If you are struggling with keeping your accounts up to date, here are some reasons to consider hiring a specialist to handle your accounts receivables.

• A business with healthy accounts receivables is healthier overall.  Businesses need bills paid on time, and in full, when possible.  If accounts are routinely 30, 60 or 90 days past due capital is tied up in those accounts and not available to purchase new inventory or to cover payroll and bills.  Extending credit to customers is necessary, and some circumstances warrant late-pays, but the longer a bill remains unpaid the greater the risk that it will become a write-off.
• Accounts receivable management is time consuming.  Consider the typical cycle:  a customer purchases an item or service, the customer is invoiced, a statement is generated each month, the customer pays the invoice with a check and the account is updated with the payment.  In some cases, billing a customer is more labor intensive than the product or service purchased.
• Accounts receivables processing can be made more efficient, but the most significant gains happen when it is handled by experienced professionals with the best tools.  Not every small business can employ a full-time bookkeeper/accountant/collections associate.  Businesses that don’t have software to automate tasks for customer invoicing/statements lose productivity when those items are produced manually.  As a result, managing accounts often becomes an expensive business activity that doesn’t achieve maximum results.
• Outsourcing your accounts frees business owners and employees to focus on activities that build a business.  Whether it is patient care, sales, product development or marketing -- focusing attention and energies on these activities can help a company grow even during lean cycles.

One additional benefit of hiring a specialist for accounts receivables management:  it helps insulate business owners from difficult situations when a customer is struggling to pay.  A good A/R professional knows how to be firm with customers, but they also understand that it is critical that they protect the ongoing customer relationship for a business owner.  Genuine customer service concerns can be escalated back to you, but routine issues can be addressed and business owners can focus on day-to-day efforts.