Breaking Down the Costs and Savings of Outsourcing Your Accounts Receivable

Managing accounts receivable is a crucial part of any organization, but it can be time-consuming and costly. That’s why many employers are turning to outsourcing as a solution. 

However, before deciding to outsource your accounts receivable functions to a third-party provider, it’s important to understand the costs and potential savings that come with this option. 

In this article, we’ll break down the accounts receivable outsourcing cost for employers and highlight the financial implications of this decision. 

We’ll also discuss how outsourcing can lead to significant business savings and provide an overall value proposition for those considering this option. 

By the end of this article, you’ll better understand the costs and benefits of outsourcing your accounts receivable services.

What Factors Influence the Cost of Outsourced Accounts Receivable?

Several factors can influence the cost of outsourcing your accounts receivable services.

Business size

The size of your business will play a significant role in determining the cost of outsourcing accounts receivable services. 

A larger company with higher transaction volumes and complex accounting processes will incur more expenses than a smaller business.

Volume of transactions

The number of transactions your business processes each month will also affect the cost of outsourcing. The more invoices and payments that need to be managed, the higher the fees will be. 

Outsourcing may still be a cost-effective option for businesses with large transaction volumes, as it can save valuable time and internal resources in the long run.

Complexity of your accounts receivable process

If your business has various payment methods, multiple currencies, and different customer credit terms, it may require more effort and resources from the outsourcing provider, resulting in higher costs.

Partner company

The outsourcing company you choose will also impact the pricing. Some companies may offer lower rates, but their services may not be as comprehensive or reliable. 

It’s essential to carefully research and compare different outsourcing providers to find one that offers a balance between cost and quality.

Overhead costs

Outsourcing your accounts receivable services can also help reduce overhead costs. By letting an external company handle this financial process, you can save on office space, equipment, and employee salaries.

These savings can significantly impact the total cost of outsourcing.

How Much Does It Cost To Hire an In-House Accounting Professional?

Hiring an in-house accounting professional can be a significant expense for businesses located in the US. 

According to our salary guide, the average annual salary for an accounting professional in the US is $78,100. An accounts receivable specialist is a bit less expensive, with an average annual salary of $64,600.

This cost increases based on aspects like the cost of living in your hiring area and level of experience. In addition to the base salary, you also need to consider overhead costs, such as:

• Office space
• Equipment and supplies
• Benefits (such as health insurance and paid time off)
• Payroll taxes

These overhead expenses can add up quickly and significantly increase the total cost of hiring an in-house accounting professional.

Here’s a glimpse at what your budget could look like with an in-house accountant:

How Much Can You Save When You Outsource Accounts Receivable Processes?

Outsourcing your accounts receivable processes can lead to significant cost savings. However, the exact amount you will save will vary widely based on your needs, the exact services you outsource, and the outsourced provider’s expertise and location. 

In addition to the elimination of overhead costs, one of the main reasons for these cost reductions is the salary expectations in popular outsourcing regions like the Philippines, India, and Latin America (LatAm).

In LatAm, for instance, salaries for accounting roles tend to be much lower than in the US. 

For example, a LatAm accounts receivable coordinator has an average annual salary of around $22,000, resulting in cost savings of $42,600 compared with the same role in the US. 

The same goes for outsourced accountant costs. An accountant has an annual salary of $42,000 in LatAm, $36,100 less than the average salary for the same role in the US.

Top 7 Countries Where You Can Outsource Accounting Professionals

When it comes to outsourcing your accounts receivable services, several countries offer top-quality talent at competitive rates. These include:

1. India

India is a popular destination for outsourcing financial services, including accounts receivable. The country has a large pool of highly qualified and skilled professionals with expertise in accounting and finance. 

Additionally, the cost of living in India is significantly lower than in the US, making it an attractive option for businesses looking to save on costs. 

However, language barriers and cultural differences can be potential challenges when outsourcing to India.

2. The Philippines

The Philippines is another top destination for outsourcing accounting professionals. The country has a strong education system and a high English proficiency rate, making it an ideal outsourcing location for US businesses. 

Additionally, the cost of living in the Philippines is relatively low, resulting in significant cost savings for employers. However, time zone differences may be a concern for businesses with strict deadlines or a need for real-time collaboration.

3. China

China is another popular choice for outsourcing accounts receivable services. The country has a large pool of highly skilled professionals with specialized expertise in accounting and finance. 

With competitive labor costs and a strong focus on cutting-edge technology, China offers significant savings for employers seeking to outsource their accounts receivable services. 

3. Mexico

Mexico is a top destination for accounts receivable outsourcing, particularly for businesses in the US. With its proximity and cultural similarities, Mexico offers a smooth transition for employers looking to outsource their services. 

Additionally, the country has a highly educated workforce with proficiency in English and technical skills necessary for accounting roles. 

4. Brazil

Brazil is another popular destination for accounts receivable outsourcing. The country has a large pool of highly skilled professionals, particularly in accounting and finance. 

Moreover, Brazil’s time zone aligns with that of the US, making communication and collaboration efficient. 

While salaries in Brazil may be slightly higher than other countries on this list, the quality of work and expertise make it a worthwhile investment.

5. Colombia

Colombia is another top choice for businesses looking to outsource their accounts receivable services. The country has a well-developed education system, producing highly qualified professionals in the finance and accounting fields. 

Additionally, Colombia’s cost of living is lower than that of many developed countries, making it an affordable option for outsourcing. 

With a favorable time zone and strong English proficiency, Colombia is an attractive destination for employers looking to outsource their accounts receivable services.

6. Costa Rica

Costa Rica is known for its highly skilled workforce and advanced technology infrastructure, making it a popular choice for outsourcing. 

The country has a large pool of bilingual professionals, with many having experience working with international clients. 

This makes Costa Rica an ideal location for businesses looking to outsource their accounts receivable services to experts who can easily communicate with clients.

Final Thoughts

Outsourcing your accounts receivable services can bring significant financial benefits to your business. By understanding the costs involved and potential savings, you can make an informed decision that aligns with your company’s budget and goals.

However, the right outsourcing partner can make all the difference when it comes to getting the most value for your money.

At Near, we specialize in recruiting top professionals based in LatAm who have the necessary skills and industry experience to handle all aspects of accounts receivable. 

Our comprehensive support will guide you through the entire hiring process, ensuring a seamless transition for your business. 

If you’re considering outsourcing your accounts receivable services, contact us today to learn more about how our recruitment services can help you save on costs while maintaining high-quality work. 

Book a free consultation call with our dedicated team, and let us help you find the best talent for your business needs. Don’t miss out on the opportunity to improve your financial operations by outsourcing your accounts receivable services with Near!