Credit control: In-house or outsourced?
For a business of any size, credit control plays a crucial role in the stability and health of 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 support and retain best practice for all transactions. If this is correctly managed, you will begin to find the problem of late payment is minimised, due to the efforts in place upfront to ensure it does not occur in the first instance.
This being said, it can be worthwhile to weigh up whether this critical function is best performed in-house, or if outsourcing to a specialised agency to work on your behalf could be more beneficial.
HOME OR AWAY?
Before deciding or re-thinking your current practice, we have put together some of the most important things to consider when deciding whether to keep your credit control in-house or outsource to a credit control agency.
You may have already decided to retain this duty in-house, as perhaps 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. This may have worked initially, however when credit control is left unattended due to other business commitments, inevitably the problem of late payment will occur. Many smaller businesses find there is contention over who is responsible for the matter and it can be frustrating when key personnel have to divert their time and efforts away from their daily role to focus on late payers. This is clearly not ideal for a small business looking to succeed.
Unfortunately, once the problem has arisen, it becomes increasingly difficult over time to take back control. Implementing the correct strategy throughout the customer contact process will ensure such issues are avoided, and staff can concentrate on their own roles without the stress and worry of chasing unpaid invoices.
If you have decided to hire a dedicated credit controller to be responsible for the job, firstly you would have to recruit the right person for the role. As many businesses have found, this may not be as easy as it seems.
Even once the right candidate is in place, it can be hard to cover periods of absence due to holidays, sickness and maternity; you may begin to see the problem of late payment creeping up again, and have to divert resource into keeping this at bay.
For larger companies who have more substantial credit control teams in place, similar issues can arise with recruiting and retaining the right personnel. Running a credit control team will bring a cost to the business and it is worth weighing up this cost against the costs involved in outsourcing this function.
A key concern often raised when considering enlisting the help of a specialised credit control agency for the job 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, working closely with you to deliver your brand values whilst upholding credit control practice to the highest degree, whereas another agency could alienate your source of business.
If you do find the right agency, you can be assured the processes will be highly professional and relied upon, enabling you to concentrate on your business’s best interests.
There are fair points on both sides of the coin here, and it must be acknowledged that no size fits all. However, the one certainty we can rely on is that your business will experience the burden of late payment at some stage.
So, investing in the right method is crucial to success. If you prefer to stay hands on in your own business, but want a water-tight credit control procedure to eliminate any cash flow issues, choosing the right agency is essential. If you would like to know how to do this, we’ve put together a quick checklist.
Choosing the right agency for you
- Recommendations: You may find a friend or trusted business associate has useful advice about who to look up, or avoid in some cases.
- Research: Take a look at their online presence, such as their website and social media. Are these outlets well maintained and easy to navigate? This says a lot about a company, and how they wish to be represented.
- Reviews: These should be available on their website and/or social media. What successes have they had, or failures, if any?
- Pricing: Is their pricing system transparent, and how does it compare to other agencies offering a similar service?
- Call the agency: A reputable agency will appreciate the time taken to pick up the phone and will gladly answer any questions or queries you may have.
- Do you trust them? Does the agency listen to your requirements for carefully managed credit control practice so as not to alienate your customers? Will you be able to know exactly what they are communicating?
- Big isn’t always best: A large, national firm is not necessarily a better fit than a small, local one. It depends on your needs and the agency’s strengths, its reputation and its track record.
- Accreditations: Is the agency a member of the Credit Services Association, or authorised by the Financial Conduct Authority? Have they won any awards?
We hope you find these pointers useful, however if you would like to find out more about outsourcing your credit control so you don’t have to worry, we will be pleased to take your call on 0800 9774848, or email firstname.lastname@example.org.