Saving Money: Outsourcing Account Receivables Can Help
For any business, whether large or small, time and resources are valuable and must be used sensibly on aspects that matter the most. Back-office processes that don’t directly contribute to growing or improving your core business should be outsourced to professional providers. One of these processes is managing the accounts receivables. It’s a time-consuming activity that can be delegated so you could focus on revenue-generating activities.
Here are the ways outsourcing your accounts receivables can help your company save more money:
- Ensures smooth cash flow
Having a proficient accounts receivable team ensures that payments are collected on time and tasks are completed efficiently. This helps provide regular cash flow, which, in turn, enables your business to run smoothly. Outsourcing your accounts receivables to a professional will offer you not only a team of specialists but also innovative solutions and technologies that make the process quicker and more efficient.
- Your own team without the extra overhead
One of the main benefits of outsourcing is that you get to hire extra people without having to worry about additional costs for workspace, equipment, and the like. Reducing staffing costs will improve your cash flow.
- Lessens indirect costs
Reducing indirect costs through outsourcing your accounts receivables helps you achieve maximum profitability. The money you saved by delegating your admin activities to an outsourced team can now be spent on more useful, growth-oriented business activities.
- Value for money
Not only do you have access to accounting and finance experts that can do the job effectively and efficiently, but you also get to obtain these services at low labor costs. According to studies, it costs around $9.38 for companies to send an invoice and 90% of that is because of labor costs. Outsourcing to developing countries with an educated labor force, such as the Philippines, gives you value for your money.
- Better client screening
Outsourcing companies that have the expertise to manage accounts receivables can help you establish credit policies and procedures that will screen your clients thoroughly—if they are credit-worthy and are able to pay sooner. This kind of efficiency will save you money in the long term.
- Pay for only what you need
Instead of having to pay a full-time in-house accountant or accounting team, increase your ROI by paying for only the service that you need, only when you need it. Outsourcing has flexible engagement models, including arrangements that allow you to acquire outsourced accounts receivables services for a certain period of time or only as needed.
Managing accounts receivables, while it’s one of the lower priority business processes, can create a negative impact on revenues when not done efficiently. It’s perhaps for this reason that accounts receivable was one of the first tasks to be outsourced, as well as one of the most commonly outsourced business processes today.
Make sure that your receivables are immediately converted into revenue by ensuring effective cash flow. Improving your accounts receivables collection process through outsourcing will help your company save money in more ways than one.