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Credit control: In-house or outsourced?

14/12/2019

For a business of any size, credit control plays a crucial role in the stability and health of the company and its cash flow. Without a robust and reliable system in place, you may find it harder to get paid on time… if at all.

In an ideal world, every customer would pay on time, enabling the business to operate effectively and grow in line with its ambitions. But, as we know only too well, this is rarely the case. Minimising these sorts of headaches is achievable, however, with a good credit control strategy in place.

Frustratingly, credit control isn’t a one-off job or a small task that can be picked up from time to time. Successful credit control requires dedication, perseverance and know-how to deliver the best results, whatever the size of your business. If it is well managed, you will benefit from lower debtor days and an improved cash position, but there are often a number of barriers that make it difficult.

The question for businesses is often therefore whether to retain the function in-house or to outsource to a specialist agency. Here, we take a look at the pros and cons of both approaches.

In-house

You may prefer to retain the credit control function in-house, perhaps because you don’t see it as a big enough job to warrant being managed by anyone but your existing team – particularly if you’re a small company. It also gives you closer control of your customer relationships, as it’s you doing the chasing, and you avoid the need to pay an agency for something you may well be experienced and resourced enough to do yourself.

The challenge for many smaller businesses is exactly that, however, in that they lack the experience or resource in-house. As a result, payment times can increase and late payment becomes more of a problem for the business. It can also be frustrating when key personnel have to divert their time and efforts away from their daily role to focus on credit control, and there can even be contention over who is responsible for the matter.

For larger businesses, although the resource may be there the performance may not. Recruiting the right people for the role isn’t always as easy as it seems, and even once the right candidates are in place it can be hard to cover periods of absence due to holidays, sickness and parental leave. Running a credit control team also comes at a cost to the business, and it is worth weighing this up against the costs involved in outsourcing this function.

Outsourced

They key benefits of outsourcing to a specialist credit control agency are the expertise they can provide, resource, and ultimately the results.

Their team will be solely focused on credit control and have the experience to know what to do in different circumstances, for instance if a customer is refusing to pay. Using an agency will also free up time and resource within your own business, bringing savings in terms of HR, recruitment and salaries, and their service can be scaled up or down at different times of the year to meet your sales patterns.

A key concern often raised when businesses consider outsourcing this task is how to ensure your customers are treated politely and courteously throughout the payment process. You wouldn’t want an agency to undo all the hard work you have put in building your brand, after all.

A reputable agency will be able to act as an extension of your brand, however, working closely with you to deliver your brand values whilst upholding credit control practice to the highest degree.

If you do find the right agency, you can be assured the processes will be highly professional, enabling you to concentrate on your business’s future.

Which approach is best?

There are pros and cons to both approaches, and the thing to bear in mind is that the answer will be different from one business to another. The key is to identify the challenges you may be facing (would you benefit from customers paying their invoices sooner, or to regain precious time that’s currently spent on credit control?) and compare that with the value an agency can bring.

Investing in the right method is crucial to your company’s success. If you prefer to stay hands on in your own business, but want a water-tight credit control procedure to improve financial performance, outsourcing could be the right option for you.

Here’s how to choose a credit control agency that’s right for your business.

If you would like to find out more about outsourcing your credit control to a specialist agency, we would be happy to discuss your requirements and explain how our services can help. Call us on 0800 9774848 or email collections@hiltonbaird.co.uk.

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