Outsourcing
Losing control of cashflow? Outsourcing can help
Kevin Downton, Client Development Manager at Pulse Credit Solutions, argues that, despite perceptions to the contrary, outsourcing can actually improve the management of cash flow within a business
Cash is the life blood of all businesses, without which they wither and die. Without a healthy cash flow, they can easily fall into insolvency, which is why it’s vital to keep a tight rein on cash if a business is to survive and thrive. Making sure that a business can pay its creditors and collect payments from debtors on time is central to this crucial discipline and most businesses have good internal systems and controls in place to do just this. However, many fail to recognise how much more efficient they could be if they outsourced this time consuming task to specially trained experts who have the most current and sophisticated systems at their fingertips to manage credit control and collections.
Perhaps they feel doing so would mean relinquishing control within their business, whereas in reality using the services of a good outsourcing partner can be hugely beneficial, enabling its most important asset - its skilled managers - to focus 100% of their attention on those areas of operations that add greatest value to the future growth and success of the company.
Outsourcing doesn’t mean losing control Despite the very real threat posed to businesses by late and non-paying customers, the crucial job of collecting payments is often either delegated to part time workers or poorly trained staff without the necessary skills or knowledge, or left to the business owner, whose time would be much better spent elsewhere in the business. Furthermore, during periods of absence, this crucial role is often neglected, increasing the vulnerability of the business.
Similarly, because credit control systems are becoming increasingly sophisticated, even larger companies may not have the most up-to-date systems and cash prediction software to help them manage large numbers of outstanding debtors concurrently and bring average debt levels down to acceptable levels.
Outsourcing is an efficient and very cost effective way of managing these challenges and growing a business. Sophisticated credit management and control systems are expensive to implement in-house and training skilled staff to operate them is time consuming and costly. Outsourcing to providers like Pulse is straightforward and not only provides businesses of all sizes with access to state of the art technology, and quality, easily understood reporting systems but also delivers the expertise to generate regular cash from your business while protecting it from bad debt. This means that the business can confidently continue trading, secure in the knowledge that its cashflow is in safe hands and reassured that the company’s relationship with its debtors is being professionally managed.
Furthermore, an outsourcing service need not be complicated to implement. Once an outsourcing partner has been identified, they will allocate a team of professionals to work on behalf of a business. The Credit Controller and the Credit Control Manager allocated to an account, will meet with a business to find out more about how their business trades and to agree the best collection strategy. Flexibility is key and they will help a business identify those customers that pose a particular problem as well as any that are sensitive enough to require particularly personal management. Monthly statements and reminder letters for all debtors are a fundamental part of the strategy, and should also be supported by polite telephone contact, irrespective of the value of the amount owed.
Of course, not all outsourcing providers are equal. But providers like Pulse will position themselves as part of a team, with the aim of maintaining good relations with customers, mindful that whilst anything other than a professional approach could damage future sales, no transaction is complete until the cash is safely in a business’s bank account. At Pulse, we
pride ourselves on the fact that, despite the many millions of pounds we collect each month, no more than 3% of client debt extends beyond 30 days of the agreed payment terms. In fact, we are so confident in our ability to improve cashflow, that we will repay the service fee on any accounts that go beyond the agreed overdue payment date.
Giving out the right message There’s little doubt that inadequate credit control will cost a business time and money and put it at serious risk from cashflow problems and instances of bad debt. Businesses may also be sending out a message to their customers that their business is poorly run and desperate for money, if the only time they contact them is to chase a long overdue payment.
Outsourcing can put them back in control and ensure that the cash keeps flowing, helping to create new opportunities and freeing up much needed time to develop and grow the most important asset. It can also save thousands of pounds and pay for itself several times over. And it costs less than they may think.
The benefits of outsourcing
• Improved quality of service and productivity.
• Improved cash cycle. • Access to highly skilled, experienced people without the inherent personnel issues associated with employees.
• Access to advanced credit control technology. • Saving money. • Freeing up valuable time. • Less downtime through sickness, holidays or maternity leave.
• No training or recruitment issues to hamper the business.
March 2012
Business Moneyfacts
®
13
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