How Outsourcing Accounts Receivable Collections Can Revolutionize Your Cash Flow

Managing accounts receivable collections can be tedious and time-consuming for business owners. It requires constant follow-up with clients, tracking payment schedules, and handling disputes. 

This not only takes away valuable time from running your business but also puts a strain on your cash flow. 

Fortunately, there is a solution that can revolutionize the way you handle accounts receivable collections: outsourcing. By partnering with a reputable service provider, you can streamline this process and improve your cash flow significantly. 

In this article, we will explain the benefits of outsourcing accounts receivable collections for employers. We will also discuss key strategies and considerations to keep in mind when choosing a service provider. 

Additionally, we will highlight the top outsourcing companies for accounts receivable collections to help you make an informed decision for your business.

What Are Outsourced Accounts Receivable Collections?

Accounts receivable collections refer to collecting payments from clients who owe your business money for goods or services. This can include:

• Sending out invoices
• Tracking payment schedules
• Following up with clients with past-due payments

Outsourcing accounts receivable collections involves hiring a third-party service provider to handle this process on behalf of your company. They will allow you to focus on other aspects of your business by taking over accounts receivable tasks such as:

• Invoicing
• Reminder calls/emails
• Dispute resolution

The outsourcing industry is constantly evolving, and the same applies to accounts receivable collections. With advancements in technology, there are now more efficient and effective ways of handling this process. 

One trend that has emerged in recent years is the use of automation and AI to send automated payment reminders, track invoice statuses, and predict potential late payments. 

Another trend is the use of cloud-based platforms for managing accounts receivable collections. These platforms help you access real-time data, support collaboration with remote team members, and streamline client communication. 

Advantages of Outsourcing Accounts Receivable Collections

Accounts receivable collections can be a daunting task for businesses of any size. Outsourcing this process to a third-party service provider offers numerous benefits, including:

Cost savings

Outsourcing accounts receivable collections can save your business money in the long run. By partnering with a service provider, you eliminate the need for additional staff and equipment, reducing overhead costs. 

This is particularly beneficial for small or growing businesses that may not have the resources to maintain an in-house accounts receivable collections team.

Access to cutting-edge technology

Tech-savvy outsourcing companies use the latest software and tools to streamline the collection process. This includes automated reminders, online payment portals, and electronic invoicing. 

With access to these advanced technologies, you can expect faster payments and a more efficient collections system.

Expertise and experience

Outsourcing companies specialize in accounts receivable collections and have teams of experienced finance professionals who understand the best practices for effective debt recovery. 

This expertise can help you collect payments faster and handle complicated situations with ease.

Enhanced focus on core operations

By outsourcing your accounts receivable collections, you free up precious time and resources to focus on your core business functions. This can improve productivity and efficiency, leading to overall growth for your company.

Accelerated cash flow

Outsourcing accounts receivable collections can help you get paid faster. Service providers have specialized systems and processes to ensure timely follow-ups and prompt payments from clients, leading to faster collections and optimal cash flow.

Reduced delinquency rates

By outsourcing your collections, you can significantly reduce delinquency rates. Service providers have qualified teams of accounting professionals who know the best strategies to handle late payments and disputes effectively.

Improved customer relationships

Outsourcing collections can also improve customer relationships. By having a dedicated team handling collections, you can maintain a positive relationship with your clients and avoid straining them with constant follow-ups for payments.

Scalable solutions

Scalability is a significant advantage of outsourcing accounts receivable collections. As your business grows, so does the volume of invoices and payments. 

By partnering with a reputable service provider, you can easily scale accounts receivable outsourcing services up or down according to your needs without worrying about hiring additional staff.

How To Choose the Best Outsourcing Partner for Accounts Receivable Collections

Now that you see why outsourcing is a game-changer for managing accounts receivable collections, let’s look at how to choose the right accounts receivable service provider for your business.

Technological capabilities

When selecting an outsourcing partner, it is crucial to consider their technological capabilities. A good service provider will have robust systems for efficient and accurate payment tracking and timely follow-up with clients. 

This will ensure that your accounts receivable collections are managed effectively.

Compliance and security

Outsourcing your accounts receivable collections means sharing sensitive financial information with a third party. 

Therefore, it is essential to choose a service provider that is compliant with relevant data privacy regulations like the California Consumer Privacy Act (CCPA) and has strong security measures in place to protect your data.

Proven track record

Selecting an outsourcing partner requires consideration of their track record. Look for a company with experience in handling accounts receivable collections for businesses similar to yours. 

You can also ask for references and read reviews from their previous clients to ensure they have a good reputation.

Value proposition

Apart from collecting payments, what other services does the outsourcing provider offer? Do they provide credit risk assessment or dispute resolution services? 

Choosing a service provider that offers additional value can save you time and resources in the long run.

Top 4 Providers of Outsourced Accounts Receivable Collections

In no particular order, here are our picks for the top providers of outsourced accounts receivable collections, including both recruiters and accounting firms:

1. Near

That’s us! We are putting Near at the top of our list because we specialize in recruiting skilled talent from Latin America (LatAm) for startups and other businesses looking to scale their teams quickly. With our experience, we’re ready to find the accounts receivable collector you need.

Our pool of experts has the experience and knowledge to handle accounts receivable collections efficiently, saving you time and resources.

Don’t just take our word for it. We helped a health and beauty e-commerce company find an outsourced bookkeeper five times faster with annual overhead savings of $26,000, and we’re ready to help you do the same with your accounts receivable collections.

2. Accounts Receivable

Accounts Receivable is a collection agency based in Orlando, Florida. It has served about 20,000 clients, collected around 120,000 claims, and successfully litigated over 15,000 claims. 

Its services include medical collections, financial and default loans, retail and service, commercial collections, collections for education institutions, government collections, international collections, non-sufficient funds (NSF) returned checks, and utilities and telecom collections.

3. American Profit Recovery

Debt collection agency American Profit Recovery is a national agency with offices in Michigan and Massachusetts. It has a 4.9 out of 5 rating on Google from over 1,800 customer reviews online.

American Profit Recovery offers standard accounts receivable services with a commitment to national services, diplomacy, a high standard of customer service, and 24/7 access to APRweb.

4. Enterprise Recovery

Enterprise Recovery is a West Chester, Pennsylvania-based accounts receivable and commercial debt collections firm. It is a certified Commercial Collection Agency and has earned a SOC for Service Organizations Engagements from AICPA.

Its accounts receivable collections services include accounts receivable management, accounts receivable cleanup services, back-office accounts receivable services, and days sales outstanding (DSO) reduction.

Steps To Seamlessly Transition to Outsourced Accounts Receivable Collections

Trying outsourced accounts receivable collections can be overwhelming, but with the right approach, it can bring numerous benefits to your business. Here are some key steps to ensure a smooth transition:

1. Assess and identify needs

The first step is to assess your current accounts receivable process and identify pain points that could benefit from outsourcing. 

These could include high delinquency rates, a lack of resources or expertise in collections management, or the need for a more streamlined process.

2. Research and vet providers

Once you have identified your needs, the next step is to research and vet potential service providers. Look for companies that have experience in your industry, a proven track record of success, and positive reviews from previous clients.

3. Develop a transition plan

It is crucial to have a clear plan in place for transitioning your accounts receivable collections process to the service provider. This should include setting expectations, defining responsibilities, and establishing communication channels.

4. Implement and monitor

Once the transition plan is in place, it’s time to implement the new process and closely monitor its performance. Regular communication with the service provider is essential to ensure everything runs smoothly and address any issues that may arise.

Final Thoughts

Accounts receivable outsourcing for collections can be an efficient and cost-effective solution for employers, especially in today’s competitive business landscape. By partnering with a reliable service provider, you can streamline your cash flow and focus on growing your business. 

At Near, we specialize in recruiting skilled talent from LatAm countries to fill remote positions for businesses worldwide.

We understand the importance of maintaining efficient cash flow management for businesses of all sizes. That’s why we help our clients hire accounting candidates offering outsourced finance and accounting services to streamline their financial operations and maximize profits. 

Are you ready to revolutionize your cash flow? Fill out this form to receive a list of candidates tailored to your business needs. 

Frequently Asked Questions

What is the difference between accounts receivable and collections?

Accounts receivable refers to the amount of money owed to a company by its clients for goods or services provided. Collections, on the other hand, are the process of collecting these outstanding payments from clients.

What is a good accounts receivable collection period?

The ideal accounts receivable collection period varies depending on your industry and business model. However, a general benchmark for businesses is to collect payments within 30 to 60 days from the invoice date.

How do you record collected accounts receivable?

When outsourcing accounts receivable collections, the service provider will handle recording collected payments. This includes updating your accounting records and providing you with detailed reports.

What are the steps in the accounts receivable collection process?

The accounts receivable collection process typically involves the following steps:

1. Invoicing: Send an invoice to your client for goods or services provided.
2. Payment terms and follow-up: Once the invoice is sent, it is important to establish clear payment terms and follow up with customers who have not made payments within the agreed-upon timeframe.
3. Dispute resolution: If there are any payment disputes, aim to resolve them promptly to avoid delays in receiving payments.

Collection efforts: If all other attempts fail, collection efforts may be necessary, which can involve hiring a third-party agency or taking legal action.