How Outsourced First-Party Accounts Receivable Can Transform Your Business Operations

With the constant need for timely payments and efficient debt collection processes, many businesses are turning to outsourced first-party accounts receivable management as a solution to their time-consuming accounts receivable processes. 

Outsourcing this function can bring numerous benefits, such as cost reduction, improved efficiency, and a better focus on core activities. 

In this article, we will discuss how outsourced first-party accounts receivable can transform your business operations and the key considerations to keep in mind when exploring this strategy. 

What Is First-Party Accounts Receivable?

First-party accounts receivable refers to managing a company’s outstanding invoices and collecting payments directly from customers. 

It is an essential function for businesses of all sizes, as it ensures that cash flow remains steady and helps maintain healthy financials. 

The first-party aspect means the business handles its accounts receivable processes, usually through an in-house team or department. However, first-party accounts receivable can also be outsourced, as we will describe below.

What Does It Mean To Outsource First-Party Accounts Receivable?

Outsourcing first-party accounts receivable means that a business partners with an external provider to handle its accounts receivable processes on its behalf. 

This service provider operates under the company’s name and branding, so from the customers’ perspective, they are still dealing directly with the company. 

This maintains the first-party nature of the accounts receivable process, unlike typical third-party accounts receivable collections, where the outsourced provider collects debts using its name. 

By outsourcing accounting and bookkeeping services like first-party accounts receivable, businesses can maintain a direct relationship with their customers while benefiting from the expertise and resources of the outside provider. 

This allows for a seamless and transparent process that can improve the overall customer experience.

Why Outsource First-Party Accounts Receivable?

There are several reasons why businesses choose to outsource their first-party accounts receivable processes. 

Cost savings

Outsourcing accounts receivable processes can result in significant overhead cost savings for businesses. By partnering with an outside provider, you can avoid the expenses associated with hiring and training in-house staff to manage your accounts receivable. 

You also do not have to invest in expensive software or technology for efficient collections. Additionally, accounting outsourcing providers often offer competitive pricing models that are more cost effective than maintaining an internal team.

Increased efficiency

First-party management of accounts receivable can be a time-consuming and labor-intensive process. Outsourcing this function to experts in the field frees up valuable time and resources to focus on your core activities. 

Moreover, external providers have specialized tools and processes that can streamline the accounts receivable process, resulting in faster collections and improved cash flow. 

Access to specialized expertise

Outsourcing first-party accounts receivable allows you to tap into the expertise and experience of collections experts well versed in accounts receivable management. 

These providers have a deep understanding of best practices, regulations, and industry-specific knowledge that can help improve the efficiency and effectiveness of collections. 

Improved customer relationships

Maintaining positive relationships with customers is crucial for any business. Outsourcing first-party accounts receivable can help you balance collecting payments while maintaining positive customer relationships. 

The outside provider has specialized training in handling difficult conversations and managing customer concerns, which can lead to better communication, a more positive experience, and improved customer satisfaction.

Assess Your Needs Before Outsourcing

Before deciding to outsource first-party accounts receivable, you must assess your specific needs and business goals. This includes:

• Understanding your current accounts receivable processes
• Identifying pain points and areas for improvement
• Determining if outsourcing would be a suitable solution

For example, a small business with limited internal resources may struggle with managing accounts receivable efficiently while focusing on core operations. In this case, outsourcing can provide relief by freeing up time and resources to focus on other important aspects of the business. 

On the other hand, a larger company with an established accounts receivable department may not see the same benefits from outsourcing and may instead choose to invest in improving its internal processes. 

Assessing your needs and understanding your business from A to Z will lead to better decision-making, ensuring that outsourcing is the right choice for your company.

How To Choose the Best Outsourcing Partner

When considering outsourcing your first-party accounts receivable, it is crucial to choose the right partner. Here are some key criteria to consider when selecting an outsourcing provider:

• Experience: Look for a provider with experience handling first-party accounts receivable processes. They should have a proven track record of success in managing similar tasks.
• Industry-specific expertise: Depending on your business’s industry, you may want to look for a provider with specific knowledge and industry expertise. For example, if you are in the healthcare industry, consider partnering with a provider that specializes in healthcare accounts receivable management.
• Technology and tools: A reputable outsourcing partner will have advanced technology and tools to streamline the accounts receivable process. Look for providers that offer automated systems, real-time reporting, and secure data management.
• Data security: With sensitive customer information involved in the accounts receivable process, it is crucial to choose a provider with strict data security protocols in place. Ask about their data handling practices and ensure they comply with industry standards.
• Cost effectiveness: Outsourcing should result in cost savings for your business. Consider the fees charged by different providers and compare them with your current costs of managing accounts receivable processes in-house.
• Effective communication: Clear and timely communication is essential when outsourcing any business process. Look for a provider that offers regular updates and open lines of communication to keep you informed about the status of your accounts receivable.
• Flexibility: Your outsourcing partner should be able to tailor their services to meet your business’s specific needs. Look for a provider that offers customizable solutions and can adapt to changes in your accounts receivable processes.
• Client references: Before making a decision, ask for client references from the outsourcing provider. This will give you an idea of their reputation and level of satisfaction among their clients.
• Cultural fit: Since your outsourcing partner will be representing your business, it is essential to consider their cultural fit with your company. Look for providers that share values and work ethics similar to those of your business.
• Legal compliance: Ensure your outsourcing provider follows all necessary legal regulations and compliances in their operations. This will protect your business from any potential legal issues.
• Service-level agreements (SLAs): A good outsourcing partner will have SLAs in place to ensure the quality and timeliness of their services. Ask for a copy of their SLAs and review them carefully before making a decision.
• Location: Depending on your business’s location and the outsourcing provider’s base, there may be time zone differences. Consider this when choosing a partner to ensure efficient communication and service delivery.

By considering these criteria, you can choose the best outsourcing partner for your business’s specific needs.

Set Clear Expectations and Objectives

When considering outsourcing your accounts receivable processes, it is essential to set clear expectations and objectives with the outside provider. This includes defining key performance indicators (KPIs) that will measure the success of the outsourced collection efforts. 

Communication is vital in this partnership, as both parties need to understand each other’s expectations and processes fully. 

The external provider will have its own expectations and objectives from the partnership. By defining these up front, both parties can work toward a common goal and ensure efficient and effective accounts receivable management.

Top 3 Companies for Outsourced First-Party Accounts Receivable

Need some help with your search? Start with our list of the top three outsourcing and recruitment firms, in no particular order, that are likely to fit your business needs.

1. Near

We’re first! At Near, we understand the importance of efficient and timely accounts receivable processes for businesses. We connect companies with talented professionals based in Latin America (LatAm) with extensive experience in managing accounts receivable processes for various industries.

Take our work with Kordis, a fractional CFO firm that we helped find a staff accountant and executive assistant in just 14 days, resulting in annual overhead savings of $109,000. 

2. BARR Credit Services

BARR is a Tuscon, Arizona-based credit service with over 90 years of experience. It is a member of the International Association of Commercial Collectors (IACC) and the National Association of Credit Management (NACM), among other organizations.

Its first-party accounts receivable services include client-driven accounts receivable services, a proprietary account software platform to store receivables data, customizable letters, monthly account intelligence reports, and personal phone calls by trained accounts receivable experts.

3. Brennan & Clark

For over 40 years, Brennan & Clark has worked from Villa Park, Illinois, to help clients with commercial collections. It is a Better Business Bureau (BBB) Accredited Business and a certified Women’s Business Enterprise (WBENC).

Its first-party outsourcing for accounts receivable processes promises efficient administration, 24/7 access, effective reminders, responsive service, and successful resolution, with 20% more collection amounts than the industry average.

Final Thoughts

Outsourcing first-party accounts receivable can be a game-changing decision for businesses looking for a streamlined approach to their operations and focus on core activities. However, it is essential to carefully consider the potential challenges and choose an outsourcing partner that aligns with your company’s specific needs. 

At Near, we know how crucial it is to have a strong accounts receivable process in place. 

That’s why we offer comprehensive support to help you recruit top professionals from LatAm who can handle your outsourced first-party accounts receivable processes efficiently and effectively. 

Our team of hiring experts will work closely with you to understand your business requirements. We’ll not only connect you with the right talent but support you throughout the entire recruitment process and beyond. 

Book a free consultation call to learn more about how we can help transform your accounts receivable processes and take your business to the next level!