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Outsourced credit control: The reasons, risks and rewards


With the burden of late payment causing significant strain on cash flow, the importance of efficient and effective credit control cannot be underestimated.

But, for some businesses, finding the time, resources or expertise needed for successful credit management can be a challenge.

Although outsourcing this vital function is an option, choosing to do so can be a big and daunting step for any business.

So, to help you decide if bringing in external help is right for your company, here we look at some of the reasons, risks and rewards associated with outsourcing your credit control function.

The reasons

There are so many reasons businesses are increasingly choosing to outsource their credit control function. Here are some of the top motivators:

1. Results!

Any payment delays from customers can have a significant impact on cash flow, throwing off your budget forecasts and making everyday activity extremely challenging. But the expertise, focus and experience external providers will bring to your collections efforts can help to secure timely payments, reducing the number of debtor days and helping to maintain a healthy cash flow.

2. Expertise

Not all companies have the capacity or requirement to employ a full-time credit controller, so existing staff members will take on the task of credit control even if it’s not necessarily in their area of expertise. In contrast, outsourced credit control companies perform credit management every day, allowing them to deliver knowledge and experience to rival in-house capabilities.

3. Cost

For many small businesses, paying staff and the overheads that go beyond their basic salaries can be a challenge, especially when they’re not being fully utilised. There’s also the costs associated with recruiting, training and retaining employees to contend with, as well as holidays, sickness and maternity/paternity cover. Outsourcing your credit control function could therefore bring instant financial advantages as you agree a suitable fee from a service which will adjust to demand in a way that’s not possible with full-time employees.

The risks

As with all business decisions there are certain risks involved, but with good communication and preparation you can easily overcome them.

1. Less control

Having an external provider complete tasks for you can mean you lose some of the control you have over it. But, if it brings better results, this isn’t necessarily a bad thing. You can maintain some of the control by setting goals and targets so that both parties know exactly what they should be delivering and when.

2. Risk of miscommunication

Communicating with someone outside of your organisation can be tricky as you’ll have different ways of working. By taking the time to build a relationship with your provider and set your expectations, you can create a successful partnership and the best communication flow possible.

3. Employee morale may be affected

If you are laying off employees to replace their job functions with an outsourced firm your other staff may start to worry that their job is at risk too. However, open communication about the decision can help to limit the negative impact, and depending on their experience and skillset they could instead be given new roles they’re more suited to.

The rewards

While successful credit management will of course help businesses to tackle late payment, the benefits of an effective strategy with a reputable credit control agency can be much further reaching.

1. Reduced debtor days

Enhancing your credit management can translate to a reduction in debtor days and improved cash flow. This is essential for funding day-to-day activity and business growth.

2. Less borrowing required

With invoices being paid faster, cash flow will be more stable and the need for funding to bridge cash flow gaps reduced, saving you money on borrowing fees.

3. Better position

With improved credit control more working capital will be available, allowing you to confidently take on new orders and capitalise on new opportunities that could put you ahead of the competition.

4. More buying power

Getting paid faster means you can pay suppliers sooner, which could put you in a better position to negotiate early settlement discounts and save your business money.

5. Better credit rating

Sometimes when a business is paid late it can fall behind on its own payments, negatively impacting its credit score. When paid on time a business can make payments, improve its credit rating and therefore increase its chances of securing funding in the future.

To find out more about how your business could benefit from outsourcing your credit control, please call 0800 9774848 or email collections@hiltonbaird.co.uk.


Just some of our clients

  • Smith & Williamson
  • BNP Paribas
  • Kreston Reeves
  • Leonard Curtis
  • Kroll
  • Barclays
  • Mazars
  • Santander Corporate & Commercial
  • Harrisons Business Recovery
  • Custom Glass
  • FRP Advisory
  • Quantuma
  • Wote Street People
  • Midland Rock
  • Leumi ABL
  • Close Brothers Invoice Finance
  • Eazipay
  • NatWest
  • PNC Business Credit
  • SER Contractor
  • Wupwoo
  • Construction Recruitment Services

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