Outsourcing for your business – credit control

The past year has proved that working from home can still mean companies continue to trade and thrive. It’s also seen an increase in UK companies outsourcing more functions as not all of them need to be covered in-house.  A 2020 survey issued by Deloitte identified 4 key trends relating to outsourcing; cost reduction, process automation, supplier management and the need to be agile. Outsourcing for your business brings many benefits when done correctly, keep reading to learn more.

One process that can be outsourced is credit control.  However, what is credit control?

Put simply, credit control is the process companies use to ensure customers don’t take too long to settle their invoices/debts.

As a business owner, this will sound familiar as it’s another ‘hat’ you (or one of your team) may wear at some point.  This then leads to another question.

outsourcing credit control

What does a credit controller do?

A credit controller is a person or party responsible for managing the debts of a business. Day-to-day duties are varied, as can be seen (not exhaustive):

  • Make timely payments

Support with cash flow by paying creditors on time

  • Negotiating with clients

Whether new or old, they might need to have conversations to outline payment terms, set up payment plans or resolve payment challenges.

  • Responding to enquiries

Maintain contact with customers (internal and external), ensuring accurate records.  This is particularly important should legal proceedings ensue.

  • Adhere to policies and regulations

Credit controllers must be compliant at all times.

Without following up on outstanding payments, your cash flow is affected, leading to the knock-on effect of your expenses being affected (payments to suppliers, payroll etc).

Is it a good use of time?  What if there was another way?  Read on, the answer is below!

Benefits of outsourcing credit control for your business:

With the burden of late payments causing significant strain on cash flows, the importance of efficient and effective credit control cannot be underestimated.

In contemporary life, where competition among businesses intensifies rapidly, outsourcing allows access to nearly every resource and skill.  Outsourcing your credit control means the surety to rely on someone without having to pay a dedicated member of staff.

It can also provide many benefits (see below):

Outsourced credit control benefits
  • Improved cashflow

This is perhaps the best benefit of outsourced credit control.  Without a healthy cash flow and without knowing when payments are due, your company can’t run effectively.  Credit controllers aim to ensure your money is collected to terms.

  • Cost Saving

How?

Employing an in-house credit controller costs £22,000+ a year.  You also have sick days, PAYE and annual leave to contend with.  How difficult will it be to find and hire someone else if it doesn’t work out?

Using an existing member of staff to chase payments is also costly due to time constraints.  This is because adding an extra job to their daily duties may result in tasks not being completed on time.  By not formalising your collection process you are leaving customers to pay when they want to.

When you use an external company to outsource credit control, it’s like having your own credit controller in house, but without the desk space being taken up.  You also don’t have to provide equipment and specialist software.  Depending on how many customers and invoices you send per month, you may only require just a few hours per week to keep your cash flow on track.

  • Expertise

When dealing with your money and cash flow, you want to make sure that you have the best people looking after it.  A great track record and experience in the industry is a must.  A professional customer focused attitude is also key.

A company who offer ‘outsourced credit control services’ will be able to start right away and have the experienced members of staff in place already.  Their staff will focus solely on this task and deliver the best results for your business.

  • Process

Professional credit management companies have formalised monthly procedures to follow, which proactively reminds your customers to pay on time.  These procedures can include letter cycles, proactive calls, query management and customer credit monitoring.

  • Aged Debt Recovery

Despite your best attempts you are going to have some customers who will not pay you on time.  Sometimes the only option is to follow the formal debt recovery steps (which now includes ensuring you comply with Pre-Action Protocols) right through to Legal Action.

A good credit control company will work through and recover your aged debt too.  They will assist you through the legal process, and they will make it stress free.

  • Less stress

A company with the experience to take the strain of collecting your money will reduce your stress levels and your to-do list!  You are free to look after customers, oversee the business, obtain sales and think.

The credit control company will advise you on credit worthiness of customers, what risk they might bring to your business and what payment terms you should allow the customer to have.

This will take away any stress or worry about that customer potentially not paying you on time.

  • Your brand in-tact

Companies have different visions, missions and objectives, however, they all have similar requirements to maintain their business success.

A good credit management company should represent the company they are working for in a professional and friendly manner.  They will base their own credit control processes around their customers company’s values and objectives.

Having a professional company dedicated to looking after your credit control is a great benefit to your business.

At FJCM, from as little as £70 per month, we will manage your credit control and debt recovery and remove all of the stresses listed earlier.

If you would like to know more, contact us and we will be more than happy to help you.