Why Should You Outsource Accounts Receivable and How to Do It?

 Outsourcing is a popular practice among businesses of all sizes looking to streamline internal operations, reduce costs, and free up valuable time. One common area many business owners tend to overlook is accounting and finance. Many companies don’t see the value of hiring accounting services until it’s too late. Its importance is considered only when the owners take hold of the situation to realise how much time and thought goes into each process. One such part is accounts receivable which needs to be managed effectively. Let us understand how accounts receivable outsourcing can streamline the whole AR process. 

 
3 Reasons to support accounts receivable outsourcing 


AR is one of the most important metrics in any business. AR and other key metrics such as AP and inventory help owners understand their business’s overall financial position. 

 

With that in mind, here are 3 reasons to outsource the AR process: - 

  1. Lack of accounting resources- If you run a small business and don’t have the funds to hire an accounting firm, you’re probably handling your AR in-house. Accounts receivable outsourcing allows you to focus on what’s important and not get burden by unnecessary work.  

  1. Avoid cash flow issues- If the suppliers are not paid on time, the business will incur penalties, negatively affecting the cash flow. Outsourcing the AR process allows you to keep an eye on receivables and ensure you’re not holding on to money for too long.  

  1. You’re not a one-person show- Many companies don’t truly understand their AR until they outsource the process and implement a proper AR process. By having accounts receivable outsourcing, the owners can analyse their standing and make adjustments. 

 
 

How to Find the Right outsourcing firm? 


If you opt for AR outsourcing, you’ll need to find the right outsourcing firm. The first thing to decide is the amount that will be spent on outsourcing AR. Once the budget is decided, research about the right firm is required. The three questions to ask when vetting a potential outsourcing firm include: -  

  • “How long have you been in business?” - It is profitable to partner with a firm with a proven track record of success. 

 

  • “How large is your company?” - If you have a large company with multiple locations and a significant AR, you’ll want to partner with a firm with sufficient resources.  

 

  • “What are your payment terms?” - It is essential to choose an AR outsourcing firm that suits the payment terms of your business. 

 
 

Bottom line: Should you outsource your AR process? 

Accounts receivable is a crucial metric for any business looking to succeed. Unfortunately, it’s not a one-person job; the above-mentioned points can be considered to ensure effective AR management. Also, business owners can consider other points per their needs and requirements. Organisations can outsource other accounting functions like AP, payroll, etc. In order to get the best services, it is best to contact accounting, bookkeeping or payroll outsourcing companies. 

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