Are you ready to make outsourcing a part of your Accounts Receivable Management (ARM) process?
An increasing number of credit professionals have already done so. They’re finding this strategy effective in taking control of their receivables and handling the challenges of managing DSO, cash flow and write-offs.
One solution worth considering is outsourcing the collection of at least a portion of your accounts receivable portfolio.
But once you’ve made the decision to outsource, how do you select a provider that’s right for you? After all, you’ll be entrusting them with your most valuable asset, your customers. How do you find a provider that’s a good fit with your particular needs and management style? What does the “right” first-party collections outsourcing firm look like?
Listed below are nine qualities and capabilities that describe the best first-party collections outsourcing providers.
What the Right First-Party Collections Outsourcing Provider Should Be
1. A/R specialists
This is a must. Large service and sales call centers like to think they can effectively manage late pay accounts, but they’re generally unsuccessful. Effectively handling past due accounts is a specific skill requiring on-going training and experienced management. A reputable, receivable management firm with a well-trained, well-managed and experienced first-party outsourcing department should always be your first choice.
2. Compatible with your corporate culture
Both you and your provider should share the same views as to what is important. The way you handle your customers should be mirrored in the way they handle your customers. Outsourcing, when it works, is a partnership. You must be confident that you and your provider can work together to achieve maximum benefit.
3. Capable of meeting your requirements
This seems obvious, but some providers may try to shoehorn you into their pre-set program. You need to stay in control. The right provider will be flexible enough to meet your specific needs. For instance, if all you need is a short-term, clean-up project, some providers gladly handle smaller projects without requiring extensive contracts. If you have international accounts, there are firms that have bilingual collectors and specialize in first party collections abroad. If you have never outsourced your accounts receivable before and are not sure what to expect, find a firm that will do a two to three-month test project. You will be able to test the waters and determine reasonable expectations going forward. Find an outsourcing partner that’s willing and able to work within your comfort zone.
We’ll continue with numbers 4, 5, and 6 in next month’s Credit-to-Cash Advisor.