Why So Many Companies Choose To Outsource Receivables
aFor a small business, managing receivables internally can be a huge drain on resources. There are employees to hire and train, as well as computers and software to buy. To get around these costs, many businesses outsource their receivables, which not only provides companies with many options in increasing productivity but also helps decrease costs overall.
It may be helpful though to understand the particulars of receivables and their importance to your overall business success.
What Are Receivables?
Let's define what receivables are. Receivables is short for accounts receivables. Receivables are monies owed to a company by its customers for services rendered or products delivered. Receivables are an asset on the company's balance sheet. On the other side of the balance sheet are payables or accounts payables. This is monies owed to vendors and suppliers by the company.
Receivables are part of a payment process where customers pay on credit. Companies extend credit to customers because it is common practice in many industries and can be a differentiator over competitors who do not offer credit.
To start the receivables process, a customer must first place an order. The company renders a service or delivers a product to the customer. The customer is then invoiced on net 30 terms. This means the customer has 30 days to pay the invoice. Collecting payment from customers is the final part of the process.
There's a lot that goes into creating a receivables process. A credit policy must be established. Will customers be invoiced on net 30 or net 60? Will new customers get a probation period? Collections policies must be created as well. How many days past due must a customer be before charging late fees? When should a late customer be turned over to a collections agency?
Many companies, especially small businesses, don't want to deal with all the administration required to manage receivables.
Instead, they outsource receivables to companies who specialize in receivables management. Services offered by these companies vary but most can include:
- Client on-boarding
- Access to a web-based payment system
- Payment management
- Credit approval
Once receivables have been outsourced, customers no longer deal with your company when paying their invoices. A 3rd party takes over. For many companies, outsourcing receivables is generally seen as an overall positive.
These 3rd parties can integrate with your existing accounting software as well. Modern accounting software is cloud-based, making it easier for team members to access the software from anywhere. The receivables company will simply be another team member.
Customers can access their billing history and pay online through a web interface provided by your accounting software or the receivables company. Either way, the receivables company will set up and manage access to the payment feature.
What Software Is Needed To Run Receivables In A Call Center?
Managing receivables is a highly interactive and customer-facing business. There's a lot of time spent on the phone collecting payments and answering billing questions. Companies managing outsourced receivables usually have a call center to handle all of the customer interactions.
These call centers outsource their communications hardware and software rather than having it installed and maintained in-house. Outsourcing call center hardware and software are possible through UCaaS and CCaaS providers. These providers are called cloud communications service providers.
Call centers pay a monthly fee for hosting communications services. When they need to add a new employee, it's as simple as adding another computer and installing the service provider's software on it. This is in contrast to older methods (although still used) where all the hardware and software is hosted in-house. In those cases, special technicians are needed to install a new phone at a workstation. Additionally, it costs far more to install hardware and all the related software in-house.
Cloud-hosted communications services have revolutionized call and contact centers. They run more efficiently and cost far less to operate.
Overall, outsourcing your internal accounts receivables department can be truly advantageous to your bottom line, as it eliminates the need hire and train multiple people, relieves you of the need to provide continuous customer communication in house and saves you money on installing and maintaining complex hardware and software systems.
Your business has enough on its plate. Outsource what makes sense for your business, choose a world class SaaS technology solution and focus on what's important: your clients. Call 1-866-879-8647 or fill out an online form to request a no-obligation quote from an 8x8 product specialist.