Accounts Receivables means when a customer purchases goods from a company and is yet to pay the money for it, so that outstanding invoices are known as Accounts Receivable. For example, when the customer purchases the goods from the company and is willing to pay for it after a few months, that pending amount goes into the receivables account.
Cash Flow is an important aspect for all businesses. This is the reason pending payments and unpaid invoices create a huge trouble for businesses and their liability increases. They can only pay back the liability after they receive the money from their customers.
In the balance sheet, accounts receivable falls under asset side but every year few customers are sometimes unable to pay the money and so the company has to have an estimate of Bad Debts that go under liabilities side.
Accounts Receivable can have a huge impact on cash flows for the business. If it is not carried properly, it can create a huge loss. If this process is carried out effectively then it can create a huge revenue for the company.
Few of the services that the companies will get by outsourcing the accounts receivables are sales order processing, help in billing and generating invoices, payment follow ups from clients, verification of invoices, customer care services, dispute and bad debt management etc.
Top 6 Benefits of Outsourcing Accounts Receivable are:
If a company decides to hire in-house professionals, they will have to purchase the software, train the employees and audit their work. It requires a lot of planning and time. Thus it is advisable to outsource this task and focus more on other important things.
Speed Up the Collection Process:
In-house professionals can also have other work to do and so this task can be delayed. But outsourcing will have a dedicated team that will full-time work for managing accounts receivable as this will be their only work to do. This will speed up the process and payments will come in much faster.
Helps Focus on Core Business:
By outsourcing the accounts receivable, you can focus more on managing the business. There will be a third party who will take care of your invoices, tracking the payments and bringing it for you will be easier. You can focus more on business operations and expand it. You can invest your time to grow your business and increase its potential.
Better Screening of Customer:
Because third parties who are involved in accounts receivables business are experts, they know which customers hold what credit in the market. They know which customers can pay you back faster. They can set the credit policies according to the customer so that the payments come in faster. Effective screening helps in turning money into bad debt.
Frees Working Capital:
Faster the payments come in, more efficiently the business operations can take place. If the money comes in at the right time, businesses can expand their work using the working capital. The income gaps will be lesser.
The outsourced agency has a team of experienced professionals who are skilled enough to bring in the payments faster. They have in-depth knowledge of their work and know all the tips and tricks to clear the pending invoices. Somewhere an in-house team can lack this.
Before selecting the right company for outsourcing accounts receivables, you should consider a few points:
Check whether the company will provide you with a dedicated team to follow-up your accounts. It is important that relationships should be maintained between both parties.
Check the experience of the management team. The more years’ experience they bring to the table, the better and faster the problems will get solved. Having an experienced Accounts Receivable manager allows you to focus on what’s important while knowing there is someone looking out for you.
How long has the company been in business? Make sure the company has a reputation for integrity and reliability.
Accounts receivable services can be a pain to manage. It’s hard enough to chase down payments from customers who owe you money; it becomes nearly impossible. And that’s not even mentioning how much time and effort goes into tracking all those accounts receivable balances! Outsourcing this task is one way many companies are able to reduce their workload without sacrificing quality or service levels. You can have an in-house team for accounts receivable but that will only increase your cost and work. Outsourcing accounts receivable is beneficial for the company and plays a significant role to bring in the cash for operations. It saves time and money both and reduces stress. So, one should never ignore the process that is profitable for the business. Invensis Technologies offers the service of managing Accounts Receivable, Accounts Payable, Medical Data Entry, Tax Preparation Services and much more.