By Outsourcing your accounts receivable function, you won't have to worry about chasing your credit customers. It will also allow you to better allocate your resources to improve the productivity of your business. The result: reduced internal costs, increased productivity, and enhanced profitability.
A lot of firms make mistakes when outsourcing that turn into big pitfalls. Here we have listed the top three mistakes business owners commonly make when hiring an accounts receivable firm.
1. Hiring an Offshore Firm
Outsourcing to a country several time zones away is one of the grave mistakes when it comes to managing credit customers.
Outsourcing the task of accounts receivable collection requires close collaboration with the outsourcing firm. You can't rely on an offshore firm to ensure the protection of confidential customer data. An offshore company may belong to a country where there is little or no legal protection against the use and abuse of confidential data.
In addition, language and cultural differences will be a big hindrance. Difference in time zones is another problem with offshore outsourcing firms. Your credit customers will likely be put off due to the difficult communication with a representative of the offshore country.
2. Not Communicating Your Needs to the Outsourcing Company
Another grave mistake when outsourcing accounts receivable function is to hire a company without having a kickoff meeting. An initial meeting is crucial for the outsourcing company to understand your exact needs.
You need to take time to ensure that the outsourcing company is on the same page regarding expectations, deadlines, and systems. Not being clear about the expectations from day one can lead to major setbacks later on.
The communication needs to continue beyond the kickoff meeting. You should explain what you expect from the outsourcing firm. Also, you should set up review meetings to update the outsourcing firm about the changing circumstances. This will ensure that there are no communication gaps that can lead to serious problems and prevent the business relationship from being productive.
3. Hiring a Firm with Little Experience
The third grave mistake that you should avoid is hiring an inexperienced accounts receivable outsourcing firm. This is important since a firm with little experience will not be able to perform the accounts receivable collection task properly.
An experienced accounts receivable management firm may charge a slightly higher fee. But the extra cost is worth it. Experienced firms will be able to get credit payments more quickly. This will result is enhanced profitability and productivity.
You will save costs in the long run by hiring an experienced accounts receivable collection firm. An experienced outsourcing firm will utilize years of experience in providing the best services. Experienced firms will be able to recover the amount owed by your customers quickly.
Credit Management Group is a US-based firm having years of experience in helping firms manage accounts receivable functions. Our effective process can reduce the days sales outstanding (DSO) and improve cash flow position. Dial 215-845-5040 today to find out how we can help you recover credit payments from customers.