As much as we would like to believe we live in a world where everyone pays an invoice as soon as it hits their desk, or at least on the first available payment run, the reality is actually very different. There will be very few businesses in Europe that do not have to engage in debt collection activities if they want to maintain cashflow. Many businesses choose to manage their debt collection internally, building inhouse teams to handle their credit control and chase overdue payments. However, more and more businesses are making the decision to outsource debt collection to an external partner.
This article outlined 6 key reasons companies choose to outsource debt collection – and why it is forecast to be a growing trend in an uncertain, post-Covid economy.
- Enable flexibility and scalability
There is still much uncertainty surrounding the global economic outlook for 2021, with hopes of a strong bounce bank being tempered with concerns over the impact of the winding down of government stimulus packages. In this environment companies need the ability to quickly scale up their credit and collections activity to ensure they maintain cash flow and protect the bottom line. Outsourced debt collection provides businesses with this flexibility and scalability. Quick to implement, often on a no-collect, no-fee basis and with flexible short-term contracts, outsourcing your debt collection can provide you with the capacity to service peaks without paying unnecessarily for the troughs.
- Access to expertise and experience
Debt collection is what debt collection agencies do every day. It is their primary business function and unsurprisingly because of this, they are usually surprisingly good at it. For any other business credit and collections will always be a secondary function and, whilst you want it to work efficiently, it will never be your primary focus. Therefore, businesses rarely look at credit and collections until something goes wrong (like a global slow-down driven by a pandemic) and by then any issues are often too deeply embedded to quickly resolve.
By outsourcing debt collection, you can secure access to process expertise without the headache and costs of building and running an inhouse department. This can be particularly relevant for businesses that engage in cross-border collections when recruiting specialist language expertise can be prove challenging and cost prohibitive.
- Make best use of human resources
In a challenging financial environment, it doesn’t make sense to use your human resource on non-core business functions. By outsourcing your debt collection, you can free up your valued headcount to focus on what really matters to your business.
- Deliver customers and improved service
Believe it or not, outsourcing your debt collection can help improve your customer service. It is very easy for credit control teams to get overloaded with work, either dealing with a high-volume of inbound calls or spending time servicing high-value customers, that they are unable to achieve 100% coverage of your customer base. Customers can often find themselves in the debt collection cycle, or worse on-stop and unable to trade, when they are simply missing an invoice or have a dispute. The scalability of outsourced debt collection services means you can guarantee 100% coverage of your customer base and ensure all your customer receive a better service from your business.
- Increase Sales
With it generally accepted that future market share will be as much won on customer service as on product and price, if you deliver your customer service an outstanding service in all areas they touch your business, you should increase your sales potential. This is really encapsulated in the phrase “make your company easy to buy from”. If your customers can’t trade with you because they are on stop because they have a billing dispute they have been unable to resolve, they will trade somewhere else. It is easy to underestimate the impact downstream process issues can have on upstream revenue opportunities.
- Reduce Costs & Risk
Outsourcing your debt collection is without doubt far more cost efficient than building an inhouse team when you are required to take on additional headcount and the costs and capital expenditure needed to service them. As most outsourced debt collection works on a non-win no-fee basis, you only pay your service provider when they deliver results. This is a significant reduction in risk from running an inhouse collections team where you are responsible for the headcount costs and overheads whatever their performance.
Barratt Smith Brown specialise in providing bespoke, white-labelled credit-control and debt collection services to our clients. If you would like more information regarding our services and what they could deliver for your business, please drop us an email to firstname.lastname@example.org or give us a call on 0116 296 1438
Author: Richard Brown, Sales Director, Barratt Smith Brown.
Richard has extensive experience working with blue-chip businesses to help them improve cash flow and deliver their working capital targets.