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Collections outsourcing: Key benefits & considerations

03/10/2022

There is a wide range of reasons businesses might choose to outsource their collections to a specialist credit control agency.

From improving performance to reducing overheads, collections outsourcing can bring immense benefits to businesses of any size – whether you’re a new start-up or more established corporate.

The key is to consider the overall value collections outsourcing could have on your business, versus continuing to manage this vital function in-house.

In this article we explain the primary benefits and reasons why businesses choose to outsource their credit control, as well as the key considerations to help you decide if it’s right for your company.

Prefer to keep your credit control in-house but need support with overdue invoices? Here’s when to use third party debt recovery services.

Get paid faster and improve your cash flow

Commonly, the number one objective for businesses which outsource their collections function is to improve collections performance.

If customers regularly pay your invoices late or not at all, this can have a significant impact on the company’s cash flow and therefore overall health of the business.

By outsourcing collections to a specialist agency, one who’s experienced and has a proven track record of reducing collections times for its clients, you could see quick improvements and ultimately gain stronger cash flow and financial security.

The positive impact can be even more pronounced if the individuals currently responsible for your credit control lack the required experience, training or expertise in this area.

Regain the time to focus on core activity and growing your business

Another key reason businesses decide to outsource this vital function is to remove the burden from their own team.

Credit control can be an arduous task, particularly for companies with a large number of customers, with a number of steps required to maximise the chances of customers paying invoices within agreed terms.

Particularly in smaller businesses, the responsibility for collections can often fall on staff whose time would be better spent elsewhere – or even on the owners of the business.

Collections outsourcing therefore enables businesses to spend their time on the areas they know best: using their expertise to help the business to grow, safe in the knowledge the company’s credit control is being taken care of by experts.

Often more cost-effective than employing dedicated credit control staff

A common misconception is that collections outsourcing is expensive. Agencies typically charge on a cost per debtor per month basis, and when you multiply that figure by the number of customers you have, it might appear cheaper to recruit a credit controller.

Yet a credit controller’s salary isn’t the full story. You’ll also need to factor in National Insurance and pension contributions, for example, as well as the fact you must pay them for holiday, sickness and potentially parental leave. Then there’s the cost involved in recruiting and training candidates or upskilling existing staff.


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You’ll also need to consider the additional overheads of having a fixed employee, such as IT equipment, utility costs and the fact that’s another desk taken up in the office. And don’t forget the management and HR overhead, in terms of performance reviews, appraisals and potentially disciplinaries. As you can see, collections outsourcing quite quickly becomes a far more cost-effective proposition.

So it’s important to do your sums and understand the true cost of employing people to run your collections function, and compare that against the cost and wider value of outsourcing.

Avoid the resource challenges presented by annual leave, sick leave or parental leave

Staff absences can create a headache in any aspect of business, from sales and marketing to HR and IT.

But it’s perhaps even more pronounced in the credit control department, as should staff be off sick, on holiday or taking parental leave, there may well be no-one available to monitor incoming payments and chase customers for overdue invoices.

Responsibility might instead fall to someone else in the organisation, who may lack sufficient time or expertise to do the job well, or in the case of maternity leave you may need to find and recruit someone on a temporary basis.

By outsourcing collections, there will always be adequate resource dedicated to your account. When the agency’s own staff are on leave, other credit controllers will be put on your account to ensure there’s no disruption to their service. All of this would be underpinned by a Service Level Agreement, and you’ll have a dedicated account manager to liaise with at all times.

Resource can be scaled up or down

It’s rare for businesses to have a consistent number of customers throughout the year. Numbers might fluctuate from month to month, whereas more seasonal businesses might see sales spike in the summer, for example, before tailing off significantly during the winter months.

In-house credit controllers will typically be contracted to work a set number of hours per week. So, in the example above, they could be overwhelmed in the summer months, potentially leading to the underperformance of the collections function, and left twiddling their thumbs for much of the winter.

Collections outsourcing enables businesses to scale resource up and down as required. Because fees are typically calculated on a cost per debtor per month basis, the amount you pay will adjust in line with your sales, making it far more cost-effective than managing the function in-house.

Peace of mind that your credit control is in the hands of the experts

Good credit controllers are worth their weight in gold, and the best will either likely be employed elsewhere or command a hefty salary. And as with all aspects of recruitment, there’s no guarantee that the candidate who excels during the interview process actually delivers once employed.

Similarly, where the task of credit control falls with someone in the company whose primary role is something else entirely, it’s unreasonable to expect them to deliver brilliant results in keeping debtor days low and overseeing timely payments from customers.


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By outsourcing your collections to a specialist agency, you can be confident that they are qualified and have the necessary training and knowledge to do a great job. Their sole focus is conducting credit control on behalf of clients, and they’ll know how to react and respond to a wide range of situations and late payment excuses from customers.

Plus, some agencies offer trial periods so you can get a true flavour of their ability and what you can expect.

Preserve customer relationships

A common reservation amongst businesses which consider collections outsourcing is that they are losing a key touchpoint with their customers, and are concerned over whether the collections agency will keep customer relationships front of mind during all communications. In many cases, though, outsourcing will not only preserve customer relationships, it can actually enhance them.

Remember that collections agencies will be used to hearing different excuses from businesses for non-payment, which takes emotion out of the equation. As a business owner who’s acutely aware of the significance of that payment coming in on time, it can be easy for the situation to escalate to the point of damaging a relationship when a more tactful approach from a third party would have resulted in a more successful, amicable conclusion.

Collections outsourcing agencies typically work on a confidential basis, meaning all communication is conducted under your company’s name. This means they essentially work as an extension of your business, and ensures the contact you and your team have with your customers revolves around the nicer things, such as taking new orders and fulfilling existing ones.

Reduce need for additional funding, saving you money on borrowing fees

The financial benefits of using a collections agency extend further than the direct comparison of outsourcing vs in-house.

With agencies likely to improve results, reduce DSO and improve cash flow, this puts the business in a much better position financially.

The result is that you’re less likely to require external finance facilities to boost or bolster cash flow, and could even facilitate securing early settlement discounts with your suppliers, providing further savings.

Access to advice and guidance on the occasions an invoice becomes overdue

Whether you choose to outsource your collections or manage them in-house, there will always be customers who resist all credit control efforts and simply won’t pay on time.

A great benefit of working with an agency is that, in the event a customer hasn’t paid, your outsourcing partner will be able to advise on the best course of action.

This could be continuing to chase through the credit control function in the belief that a breakthrough is just around the corner. Or it could mean the agency contacts your customer under their own name, essentially flipping the communication into more of a ‘debt recovery’ angle and using the weight of the agency’s involvement to encourage payment. They may even suggest the legal avenue would be the most suitable, in which case the agency would be able to walk you through the process.

If you continue to manage your credit control in-house, it can still be hugely valuable to partner with a collections business for situations such as these. By having an agency you trust and rely on, you can quickly and easily pass the account across for them to assume responsibility for recovering it, giving you back the time to focus on the rest of your ledger.

Hilton-Baird Collection Services is an experienced and award-winning debt collection and outsourced collections agency with a proven track record of delivering results for clients. To explore whether your business would benefit from collections outsourcing, or to discuss any invoices you’re struggling to collect, contact our friendly team on 0800 9774848, schedule a call back or request a credit control quote here.

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