Inadequate accounts receivable management is a very common problem among the majority of business organizations. According to Atradius:
- In the US, 39% of invoices are paid late.
- 48% of payments are delayed by customers.
- 52% of businesses are requested to extend payment timelines.
These statistics clearly indicate that accounts receivable and payable have a big room for improvement. And accounts receivable outsourcing can be a perfect solution to quickly improve AR management.
In this post, you’ll touch on numerous aspects of outsourcing accounts receivable services so you can effectively manage your company’s AR.
Why is Accounts Receivable Outsourcing the best way to improve AR Management?
To save your firm’s time, resources, and money, outsourcing accounts receivable services is the best solution. Your outsourcing partner can use various ways to improve your AR management, like Advanced billings, sending reminders, offer discounts, multi-payment options, imposing penalties, etc.
Effective Payment Collection Process
Accounts receivable outsourcing improves the payment collection process with advanced billing and customer-centric payment methods. Your outsourcing partner can ensure to collect all the due payments within a certain timeframe through vivid payment options like upfront discount.
Strengthen your Business
When you delegate AR work, you can free up lots of time that you can use to strengthen your business. All those activities that you’ve been ignoring to manage AR, you’ve now time to focus on them like exploring new investment opportunities, experimenting with various marketing campaigns, etc.
An outsourcing company has the expertise to establish credit policy and analysis customers’ creditworthiness. They’ll tell you whether your clients have a good or bad credit score. This practice will help you in saving your money and protect your debtors from turning bad.
Outsourcing companies have highly trained staff and the latest tools that can naturally make AR management flawless. Therefore, you can get the best quality AR services without going through the trouble of hiring in-house accounting professionals or buying various accounting software.
Business Continuity Planning
Under the prevailing pandemic uncertainties, it has become essential for businesses to prepare their continuity plan. And when you are outsourcing services, you are automatically developing a risk management system to continue your business during unfavorable circumstances.
Transparent Financial Ecosystem
When you have real-time incoming and outgoing cash flow knowledge, you can build a transparent financial ecosystem. With this knowledge, you can make timely strategic decisions to grow your business.
7 Steps to improve your AR Management with Accounting Receivable Outsourcing
Indeed, outsourcing accounts receivable services can improve your accounts management process. However, if you are wondering how exactly can outsourcing help, the following seven steps can answer it:
1. Smooth Invoice Management
One of the core accounts receivable services is invoice creation, distribution, and updating of systems. The process of creating invoices as per the service or product delivery date and sending them before the due date is a systematic task. And outsourcing service providers can effectively do it.
You can send digital invoices through emails so that your clients can quickly receive them and clear payment on time. Furthermore, update your invoice status in real-time to receive a clear view.
2. Constant Follow Up
You often have to deal with incomplete or delayed payments. That can be managed by keeping a constant tab on your accounts receivable and frequently sending reminders to your clients.
If you find any client delaying payments, you should demand a reason and try to come up with a solution to speed up the process.
3. Analytical Support
The accounts receivable management is incomplete without proper analysis. Therefore, you should use various accounts receivable analyses to gain insightful AR information. The useful accounts receivable analysis to try—is business segment analysis, aging analysis, customer area analysis, and so much more.
4. Perfect Accounts Preparation
When you and your customers are busy running your businesses, you won’t have sufficient time to prepare multiple accounts statements and reconcile them. So, you can outsource AR services and keep your invoices, accounts receivable, and other related information updated on systems
5. Improve Customer Payment Terms
When your payment terms aren’t up-to-date, you can’t improve your AR management. Therefore, it is essential to revise custom payment periodically.
For instance, to encourage your customers to clear payments a few days early, discount offers can be given to them. On the contrary, penalties can be also imposed on late payments. This is a very common payment collection strategy, but based on your business structure and size—a custom debt collection strategy should be prepared.
6. Helps in maintaining good relationships with Customers
Satisfied customers are the biggest assets of your business and help in maintaining a continuous revenue stream. Therefore, implement methods that can help to build good relationships with your customers and ensure they always pay on time.
For instance, you can occasionally send emails to know whether customers are satisfied with your debt collection policies or they wish for some changes. When your customers are satisfied, you don’t have to worry about payment delays or failures—this is an expert’s tried and tested formula.
7. Realistic Financial Predictions
Whether you have received advance payment or some payments are still outstanding, both accounts need to be maintained separately. Based on the accounts, you can make a prediction about your financial health.
If you have received payments in advance or on time, you have nothing to worry about. However, if your outsourcing payments log is expanding, you might be in trouble. The right prediction is when made timely, you can take immediate actions to improve your accounts receivable management.
Accounting receivable outsourcing can improve your AR management through multiple steps. From making timely predictions to recording real-time entries, an outsourcing company can help in numerous ways. Therefore, whenever you are struggling to manage accounts receivable, hire an outsourcing accounting firm.
If you are looking to improve your accounts receivable management, you can contact CapActix by email – [email protected]. or can call on +201-778-0509 for accounts receivable outsourcing services.