Impact of Managing Your Customers With Outsourcing Accounts Receivable Services

The global Accounts Receivable automation market size is estimated to spike from $3.3 billion in 2022 to $ 6.5 billion by 2027 with a CAGR of 14.2%. The past two years of the pandemic have hit a severe blow to the income and profit margins of small and large businesses. As such SMBs have been facing top accounting challenges, especially in accounts receivables, cash flow, paperwork, the closing of books monthly, and payroll management for a decade. So it does make sense for these companies to leverage the benefits of cloud technologies and outsource accounting services for optimizing their operations. However, the use of accounting software is increasing at a great pace over the last few years, yet a lot needs to be done for making a business worldwide norm.

The global accounting software market size is expected to reach $19.59 billion with a CAGR of 8.5% from 2021 to 2026.  Moreover, the global cloud accounting market share is projected to increase by $5.65 billion by 2028. In such a scenario, outsourcing accounting services for small businesses is ramping up speedily due to the overwhelming tasks involved in money collection. No business however small or big it is can afford to commit mistakes undesirably. It can be highly disastrous and the company will peril soon.

Even a reputed brand faces payment issues from customers. To stabilize the cash flow position of your company and protect your business reputation, you need to hire trusted and best-outsourced accounting receivable services. With these services, it becomes quite possible to minimize the number of bad apples in your receivables basket and find an effective way to manage your accounts receivables services.

What are Accounts Receivables (AR)?

The role of the Accounts receivable department is to monitor the collections against billed invoices and put enough effort to execute on-time collections. The accounts receivable team performs tasks such as generating customer invoices, reconciling AR accounts, and issuing customer refunds.
To have the right AR management strategy, you must add a protective layer to avoid future non-payment situations. To grant credit is an important strategy for customer retention. There may be some genuine customers who are waiting for their AR collections so that they can pay their bills. The most important task performed by the AR team is to check the worthiness of the customer for credit extension.

Importance of Outsourcing Accounts Receivables

You need a consistent invoice collection process that focuses on cash flow. Post-pandemic this process has become the need of the hour. If you continue following the traditional collection techniques, your business may suffer from missing out on customer payments, imbalanced account reconciliations, and various business debt defaults.
By outsourcing accounts receivable you can optimize working capital management, improve client relationships, and enhance collections on invoices. Outsourcing accounting services is a powerful strategy for businesses that lack efficiency or enough resources to develop a dedicated AR team.
Let us find out some of the significant benefits of outsourcing accounts receivable services for your company.

Pros of Outsourcing Accounts Receivable Services

Businesses that thrived during the pandemic were able to redirect their service delivery and payment collection models in tune with the new normal. The last two years brought in hundreds of startups who went on to establish innovative projects with high hopes. With this, outsourced accounting for startups saw an uptick. A survey from UpCity reveals that accounting, IT services, and digital marketing are the top three business processes that are outsourced by businesses across the globe.
Enhancing the AR processes of a small-scale or a medium-sized enterprise is a costly affair. You need a heavy investment of resources in the streams of technology, training, and staffing. In such a scenario, outsourcing accounting receivables is the most reliable and effective solution for reducing Day Sales Outsourcing (DSO) metrics. Check out the benefits of these services

Quick Payment Collection

It is not just about raising invoices and sending auto-reminders to get paid on time in any business. If you want your invoices to be prioritized for payment, make sure you make consistent and friendly contact with the clients. There are chances when the accounting department may not have enough bandwidth to take follow-ups. The outsourced accounting services department will ensure to give regular payment reminders to all your overdue customers. This will drastically enhance the frequency of regular payments. And with the outsourcing AR experts around, you may not fear damaging the relationship with your late-paying customers.

Using the Best Practices

Every company has diverse workflows and hence the AR best practices differ according to their size and the industry that they belong. A professional outsourced accounts receivable partner can prove to be of immense value as they will help you identify the gaps in your AR workflow as compared to the industry peers. The immediate benefits that you can get are:

Get an impartial assessment of your existing AR process.
Reconciliation enhancement and finding accounts discrepancies
Preparing financial reports for future revenue and liquidity assessment
Enhance the accuracy of your customer credit policies.
Invoice Streamlining Via Automation

Traditional processes of invoicing may create errors and discrepancies that can affect your cash flow. Delay in invoice generation, an imperfection in recording customer data, and billings of customers who are outside the system are some of the common issues. AR centralization and automation of AR processes with electronic billing systems and customer portals is the best resort. With outsourced accounting receivable services you will get access to the latest trends in automation and innovations with zero investment.

Moreover, automating collection management processes will cut down the silos between various business units. Hence, transparency will be improved in financial reporting enhancing the ability to take strategic decisions on time.

Minimum Employee Costs

Outsourcing accounting receivable services will fulfill all the required processes along with automation needs. This means you have fewer overhead expenses combined with the benefit of smooth cash inflows. In addition, you can scale your AR collection process as your business expands and need not worry about hiring and training additional staff.

Chances of Reducing DSO (Day Sales outsourcing)

After you hire an outsourced accounts receivables partner, you can settle by reducing 10 to 30 days of DSO according to the business deliverable in the business contract. Lower DSO infuses more cash for funding your business operations. An ardent entrepreneur is aware of the pros and cons of accounting receivable services as there is a risk involved in handling the key functions to the third party.
However, these risks are eliminated when you decide to work with a premium accounting outsourced partner.

Financial Expertise

A professional AR expert holds a significant background in the accounting field. With the plenty of experience and valuable insights that they have obtained, you need not worry. Their financial expertise will help you reconcile discrepancies in accounts and keeps you off from mismanaged books. They work with in-house professionals who create financial reports keeping in view the state of revenue and liquidity factors. Moreover, outsourced professionals provide an additional advantage called impartiality. They avoid any sort of bias towards influencing business and focus completely on the financial numbers.

Pros of Outsourcing Accounts Receivable Services

We have the best tools, skills, and technologies to revamp your existing AR flow and offer new capabilities to assimilate the whole process of billing and collections. At California Bookkeepers, we leverage our AI technology to develop focused teams of outsourced accounting solution experts that facilitate companies to solve their problems and promote growth. Our core focus on finance allows us to instantly identify experts across the US with the perfect mix of skills, experience, and credentials to meet up with every company’s goals and objectives. Request a consultation call to find out our accounts receivable services in brief.

Leave A Comment