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Nine Earmarks of the "Right" A/R Outsourcing Partner

Take control of your cash flow, manage your DSO, and reduce write-offs

Are you ready to make outsourcing a part of your Accounts Receivable Management (ARM) process?

An increasing number of credit professionals already have. 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.

4. Committed to best in class processes and systems

If they can’t do it better and faster than you can, why bother? Don’t look at costs alone when selecting a provider. Dozens of studies have shown that cost savings, by itself, isn’t enough to justify outsourcing your accounts receivable. However, the time saved, detailed reporting, effectiveness and consistency you can get from a professional provider working in a state-of-the-art system can be huge. Outsourcing isn’t just about throwing more bodies at the problem. It’s about giving you a cost-effective means of staying on the cutting edge.


What the Right A/R Outsourcing Provider Should Do

5. Customize their program to meet your requirements

A good provider will work with you to help define your needs and develop reasonable expectations. Based on this information, they will then develop a customer treatment plan to achieve your goals.

6. Develop a program based on sound business rules

Following proven techniques for account management, a qualified provider’s service should always be rooted in knowledge of your customers. Moreover, a clear plan of action for how claims will be handled is key to a program’s success.

7. Assign a dedicated team of representatives, thoroughly trained in recovery techniques, dispute resolution and customer service

The provider will then train these reps in your systems and continue to monitor their effort to ensure your expectations are being met. It’s the provider’s role to act as an extension of your company, and customer care should be a top priority.

8. Provide access to your account activity in real-time

The provider’s software system should allow their associates to track all activities and customer promises, which will assure consistent and timely follow-up. You should also have the ability to view real-time activity on each account and communicate directly with the associates. Ensure the provider you select offers a client portal.

9. Provide reporting that is transparent, meaningful, and insightful

As noted above, your entire portfolio should be accessible through a client portal that you can access for on-demand account information. Statistical reports should be available in the portal, and your outsourcing partner should provide you the ability to customize reports, as necessary, to coordinate with your internal metrics.


Benefits of Partnering With the Right Provider

To survive in today’s business climate, cost-effective, efficient receivable management is critical. Not only are resources tight and the competition fierce, the economy has added a new level of challenges. Now consider this: a $500 loss, at a 5% net profit rate, costs $10,000 in sales!

Outsourcing all or part of your accounts receivable management process to the right provider should help by:

  • Improving your customer relationships while training them to pay within your terms;
  • Giving you the ability to right-size staff, ensuring qualified coverage for special projects, vacations, seasonal business upswings, etc.; and
  • Lowering your DSO, decreasing write-offs, increasing cash flow, and improving the overall health of your company.


Check out the other outsourcing articles we have on our website.
For more information about our commercial collection services, contact us at 844.937.3268 today!