Whether you’re a small business or a large corporation, outsourced accounting helps you quickly scale and grow your business. Accounts receivable outsourcing costs help keep up with demand without the budgetary strains of onboarding new employees. Large corporations reap the benefits of outsourcing bookkeeping and accounting services by keeping up with cash flow needs. Continue reading to learn more advantages of account receivable (AR) and AR collection techniques.
When to Consider Outsourcing Accounting
Do you find yourself making plenty of sales but struggling to collect payment on goods and services you provide? Is your in-house accounting department struggling to keep up with growing accounting tasks? Do you lack AR collection techniques that produce reliable, timely payments?
If you’re a business owner who said yes to any of those questions, outsourced accounting services are for you. Finding an expert service provider to handle your collections, collect accounts receivable more effectively, and provide peace of mind.
The Benefits of Outsourcing Bookkeeping and Accounting
When you outsource, you do more than improve your accounts receivable collections. There are several advantages of accounts receivable partnerships with third-party providers, like:
Along with being efficient, outsourced accounting is incredibly cost-effective. For the price of a single employee, outsourcing accounts receivable delivers a team of experts with innovative technology and proven AR collection techniques. Best of all, Accounts receivable outsourcing costs are typically a fixed monthly fee so that you can budget around them.
Increased Cash Flow
One of the most attractive benefits of outsourcing bookkeeping and accounting services is getting debts paid faster and in full. Specialists have experienced every excuse and reason why a customer missed a payment or had their account go delinquent. They’ve developed AR collection techniques that generate quicker payments and full invoice amounts. Most in-house teams don’t have the time and experience needed to perfect this process.
If your business takes out loans against receivables, outsourcing can save you substantially by reducing the amount of interest paid. That’s because you’ll have increased cash flow you can use to pay off your debts.
Firms whose principal offering is outsourced accounts receivable can implement clear credit policies and run checks on customers’ creditworthiness. Establishing credit options and limits based on each client’s unique factors is a tremendous advantage of accounts receivable outsourcing.
Regulating how much debt a client can accrue helps prevent them from reaching a point that becomes overwhelming and problematic for you. And your clients with solid credit histories and a track record of paying on time also benefit. You can confidently extend more significant credit amounts while remaining protected from default.
Innovative Software and Greater Accuracy
Manual accounting functions are prime opportunities for clerical errors, entry mistakes, and other inaccuracies. A significant advantage to accounts receivable outsourcing is improved accuracy. Using cutting edge software and proven best practices, an outsourced partner monitors and maintains your AR so that it runs smoothly
Relieve Overwhelmed Staff
From constantly crunching numbers to sending payment reminders, your AR team has a lot to do. As your business grows, their tasks mount, which keeps them from focusing on core operational functions. With the assistance of an outsourced accounting partner, your team can remain focused on high-priority projects knowing your partner is handling collections.
Handling customers who avoid payment, dodge calls, or dispute charges takes patience and finesse. You may not feel comfortable reaching out to customers with whom you’ve had long-term relationships out of fear you may strain business dealings.
Outsourcing gives you the advantage of accounts receivable professionals utilizing AR collection techniques that result in you receiving payment without damaging any relationships. They are trained and experienced in handling the collections process in a sensitive but businesslike fashion that doesn’t appear intimidating or strong-handed.
What Are the Best AR Collection Techniques?
Outsourcing accounting companies are so effective because they rely on tried and true AR collection techniques. While your in-house processes may be straightforward and built around established best practices, there’s no replacement for experience and flexibility.
If you’re looking to take advantage of accounts receivable techniques that improve the collection process, consider:
Reporting provides a holistic view of your accounts receivable. Calculating the current status of all accounts receivable at your business is a necessary step in improvement and management. Accounts receivable turnover (ART) reports track the status of all accounts and give insights into how effectively your team collects funds on time.
The higher your ART score, the more efficient your processes are. Low scores indicate inefficiency, poor techniques, and problematic processes. Whether good or bad, you can leverage the insights gained from ART reports into business-changing reforms.
Whether you’re using in-house or outsourced accounting, automating processes is very beneficial. Automated solutions improve AR collection techniques by simplifying:
- Task management
- Real-time metrics and actionable insights
- Outreach efforts
- Payment forecasts
- Risk scoring and assessments
Offer Payment Plans
Most businesses don’t want to miss payments or go delinquent. Typically a missed payment is accidental, but repeat or prolonged missed payments usually indicate a customer has cashflow problems of their own.
Offering accounts receivable financing options that break payments into more manageable amounts enables you to keep money coming in without escalating your collection efforts with legal action.
Whether you’re taking advantage of the benefits of outsourcing bookkeeping and accounting services or not, entering into contracts helps guarantee payment security. It also gives you stronger footing should you need to escalate a claim.
Your contracts should be clear and concise. Making sure they cover all aspects of due dates, credit limits, late penalties, and other critical information protects you from disputes. Purchase orders are also an excellent AR collection technique. They clearly define what is expected from you and your partner and make sure there’s no miscommunication.
Take Advantage of Accounts Receivable Outsourcing With Rapid Collections
Rapid Collections is a debt collection and recovery firm that has helped clients worldwide improve their cash flow and protect their interests. We use cutting-edge software and effective AR collection techniques to ensure you are paid on time and in full. Reach out today to discuss how and why outsourced accounting can save you money and time and improve your operations.