Credit control is vital in keeping businesses of any scale financially healthy. But with a backlog of customer invoices, fluctuating payment cycles, and complex accounting processes, it can be challenging for businesses to keep up with credit control demands.
This is particularly true for businesses that don't have the staff numbers or resources to create a dedicated in-house credit control team. Outsourced credit control has become a popular and effective solution to this problem, providing businesses with all the benefits of a full-time credit control team without the associated costs or HR demands.
Here are six reasons to consider outsourcing your credit control:
1. Get expert help
Expert outsourced credit control providers have the skills, processes, and knowledge to manage your credit control professionally and effectively.
The right provider will be able to manage all aspects of debt collection quickly and successfully, including setting up credit limits, sending out invoices promptly, and chasing overdue payments.
The benefits of this kind of skilled credit control go far beyond just cleric assistance.
Businesses worldwide are currently in the grip of a late payment crisis. Chaser's late payments report shows that 9 in every ten firms are consistently paid late, reducing cash flow and stunting growth.
Even worse, 50% of businesses spend more than four hours per week chasing payment. That's an incredible amount of time and money that could be better spent on other activities that increase profitability and strengthen the bottom line.
Investing in outsourced credit control can help combat this issue before it spirals out of control. With the help of a dedicated credit controller, businesses can reclaim their valuable time and resources by automating the collection process, freeing up staff for more productive tasks.
2. Reduce your bad debt
Research by Amicus Commercial Finance indicates that 76% of businesses write off nearly £50 billion in bad debt every year. This is a considerable cost to businesses and puts a massive strain on their cash flow.
Expert outsourced credit control can shield against these kinds of losses by chasing payments and reducing bad debt. Credit controllers can use various methods to encourage customers to pay their invoices on time, such as offering flexible payment plans and automated reminders.
Effective credit control can also act as a preventative measure, credit checking potential customers to reduce the likelihood of dealing with bad debtors. Understanding a customer’s credit history allows businesses to make more informed decisions about who they are doing business with and have better control over their cash flow.
By providing expert support and guidance, credit controllers can use their knowledge and experience to reduce current bad debt and the risk of future bad debt. This could involve finding ways to help customers who have difficulty paying their invoices, such as offering them a payment plan or providing additional support.
3. Cost saving
A full-time in-house credit controller costs a business £27,000 to £31,000 per year in salary alone. When you add on the associated costs of recruitment, training, and HR management, it can be a substantial outlay for a business that may not be able to hire additional staff.
Outsourcing credit control services is an economical alternative, allowing companies to access all the benefits of a traditional credit control team without the associated costs of employing additional staff.
There is also the time costs associated with recruitment and training to consider. With outsourced credit control, you get access to expert assistance on day one without needing recruitment. This saves time and money while still allowing businesses to benefit from the expertise of experienced professionals.
By choosing to outsource their credit control, businesses also divest themselves of the need to supply and equip new staff with the necessary resources to do their job. Outsourced credit control providers already possess these resources and are updated regularly, meaning that businesses can benefit from the latest technological advancements as soon as they become available.
Outsourcing credit control also helps businesses scale up or down operationally in reaction to changes in market conditions. Small businesses may require extra help to manage their accounts during peak periods. Larger enterprises can outsource all or part of their credit control requirements, freeing up existing staff for other tasks.
4. Improve cash flow
Consistent cash flow is critical to any business's success and continued survival. Credit control helps to ensure cash is coming in as quickly and regularly as possible, helping to smooth out periods of financial strain and increase profits over the long term.
Outsourcing credit control services can help balance the books more efficiently, improve efficiency, free up staff for other duties, and ensure a business runs like clockwork.
These benefits are computed by the consistent threat to cash flow that late payment represents. As mentioned earlier, late payment has become a crisis forcing businesses into insolvency.
One in five insolvencies is now attributed to late payments, and 90% of small company managers surveyed complain they do not have access to tools or information to assess whether they are trading with insolvent companies.
Expert outsourced credit controllers can help in this regard by reducing the time needed to chase debtors and assessing the credit risk of new clients. In addition, they bring a wealth of experience to bear in negotiating with customers over late payments and have access to additional specialist tools that may be used as leverage.
Outsourcing credit control can help businesses reduce their bad debts and increase collections from overdue accounts by taking this burden away from business owners or finance teams. It also frees up resources to focus on sales and marketing, improving customer service, and developing new products. Ultimately, this should result in improved bottom-line performance for the business.
5. Less stress and worry
The psychological impact of late payments on business owners is often sadly overlooked. Still, the stress and worry can be considerable and significantly affect those involved's personal lives and mental health.
Just over 60% of small business owners suffer from stress, anxiety, or depression caused by late payments. Around 41% of SME owners said late payments had caused issues outside of work, impacting their social and family life. That's why it is vital to ensure that payments are received promptly, reducing the worry and stress of business owners across the globe.
Outsourced credit control removes some of the weight from the business owner's shoulders, taking responsibility for chasing and collecting payments. It also ensures that outstanding invoices are monitored regularly, helping to provide payment terms that are adhered to.
Credit control companies work with businesses of all sizes. They will create a tailored strategy to suit their needs, helping them get paid quickly and reducing the stress of chasing payments.
By outsourcing their credit control requirements, business owners can ensure their business's long-term viability and delegate one of the most stressful tasks to an experienced team of professionals. This enables them to focus on other business areas and create a financially secure future.
6. Maintain and improve customer relationships
While it might seem counterintuitive, reasonable credit control improves your customer relationships. By promptly and professionally chasing overdue payments, you demonstrate to your customers that you are organised and efficient in dealing with their accounts. You also ensure they remain compliant with their financial commitments to your business.
By outsourcing their credit control requirements, businesses can ensure a consistent approach to managing incoming payments and creating positive customer relationships. Credit control specialists can be trained to communicate professionally and be friendly, helping customers feel valued and ensuring that payments are received on time.
If your customers are paying late because they are experiencing cash flow difficulties, then the option to offer alternative payment plans can be explored. This helps customers manage their cash flow while ensuring the business receives timely payments.
Offering these options can help build long-term relationships between your business and its customers. This is crucial to credit control, ensuring customers are happy with the payment process and building trust.
Chaser's outsourced credit control services
As market leaders in the field of credit control, Chaser's outsourced credit control services help businesses manage their accounts receivable and get paid faster. Our experienced specialists provide a fully managed service, taking invoice chasing and credit control completely off your plate so you don’t have to worry about late-paying customers.
Contact us today to learn more about how Chaser's outsourced credit control services can help your business. Our experienced team will be more than happy to answer any questions you may have!
