Credit Control Outsourcing: Tips for Smooth Integration

Efficient credit control is a critical business growth driver, impacting its top and bottom line. The opposite is also true; ineffective credit management can result in continuing financial risk to your business and an unhealthy cash flow that impedes business growth. Companies understand the benefit of driving efficiencies in credit control but cannot build a high-performance credit control function, unable to navigate some of its underlying challenges, such as:

The time-intensive nature of credit control and the inability to assign the necessary number of accountants to this process
Failure to drive tech-led transformation in credit control because of lack of budget allocation and needed expertise
The failure to scale the credit control function in line with business growth because of a skills shortage in the finance and accounting (F&A) domain
Economic volatility prevents finance leaders from making strategic investments in credit control
Lack of complete visibility into a customer’s profile resulting from limitations within the overall credit risk management process

Leaders who want to address such challenges see credit control outsourcing as an innovative option that helps them benefit from labour arbitrage and drives much-needed efficiency in the credit control function. However, the complexities of credit control dictate the seamless integration of the outsourced team of credit control experts with your internal processes.

Smoother Integration with an Outcomes-Focused Approach

Think of outsourced credit control as a way of experiencing specific tangible outcomes, which could be:

Increase in business cash flow
Decrease in Day Sales Outstanding (DSO)
Discernible increase in extremely credit-worthy clients
Improved processes and productivity
Technological transformation in the credit process
Scalable structure of credit control process

………… And more!

Here are five tips that will ensure the tighter integration of your internal teams with credit control outsourcing companies:

Technology Integration

This must happen because your company will already use specific credit management systems and others intrinsically linked to accounting functions like Sage, Xero, etc. An ideal association with a provider when you outsource credit control, is driven by the seamless integration of these systems with the provider’s accounting tech stack. But there is another element to this integration, which is tech transformation. According to Gartner, 34% of CEOs focus on technology-related priorities, and 90% of businesses will leverage at least one AI-enabled technology. A key reason why leaders choose outsourcing is to take advantage of the advanced tech that outsourcing providers offer. Such technologies should also successfully align with existing internal processes and complement them rather than disrupt them.
The Collaboration Angle

You must ensure your internal team can work effectively with the outsourced credit control department when you outsource credit control. Different companies have different working styles, organisational structures, and how different internal teams collaborate. With outsourcing, another team is added to the mix, which needs to be assimilated seamlessly to work together to improve the credit control management process. This will require your company and the key stakeholders to establish collaboration guidelines and systems that can effectively merge with those of the outsourcing provider. Take, for example, a collaborative tool like Slack, Microsoft Teams, or others. Your company and the outsourced credit control provider should get on the same page to use the same tool. This is just one example of the collaborative effort required to ensure smoother alignment.
Another element of collaboration is communication. In credit control, the outsourced team might be tasked with directly talking to customers to follow up on payments due or looking for more information to evaluate their creditworthiness. Again, clearly understanding the standards of politeness and respect that must be followed will help avoid problems later.
Clearly Defining Alignment Areas

Let’s look at this pointer from the perspective of the various metrics that help evaluate a customer’s creditworthiness. An emerging trend amongst companies is to adopt a multi-bureau approach to ascertain the financial health of an entity. So, your company might not depend on the information provided by just one credit bureau to get clarity on a customer’s creditworthiness and might use the services of at least a couple. Will your credit control outsourcing provider be able to meet your needs in this particular aspect?
If your company considers the sustainability metrics of the customer to determine creditworthiness, the provider must not only understand why this is an essential metric for credit risk assessment but also be able to evaluate the performance of a potential customer’s business against ESG Credit metrics.
These two examples illustrate how essential requirements must be conveyed definitively to the provider, who must offer a concrete assurance of satisfying these requirements.
The People, Process and Platform Approach

Adopt a three-pronged approach towards integration. Think of it from the point of view of the people who need to be integrated into the credit control process, how your internal teams will respond to them, and how this team can complement the performance or even enhance the efficiency and productivity of your internal team, and how they will help you scale your credit control function effectively.
Secondly, look at it from the process perspective. Think of integration as a means of standardising processes and enhancing credit control performance. Metrics like reduction of cash collection shortfalls, decreased DSO, delivering updated status on ledgers, and others should be the criteria for evaluating process efficiency.
Thirdly, think of system integration from the platform perspective, wherein credit control operations can be scaled easily, the reportage becomes accurate, and informed decision-making strengthens risk management.
Partnering with The Right Credit Control Outsourcing Provider

Hassle-free system integration is also a direct outcome of the quality of the third-party credit control services provider you are working with. Partner with a company with a proven track record of delivering credit control outsourcing services for businesses across diverse domains and working with companies of different sizes. Get more clarity on how the provider has successfully managed the integration of the 3Ps – People, Process, and Platform, to create a scalable, reliable, and performance-driven credit control system. While experience and expertise are essential criteria of choice when outsourcing credit control, it is also important to check a provider’s integration methodology and approach toward delivering robust credit control services.

Conclusion

Your company must leverage credit control best practices to ensure your business takes on minimal financial risk, as its customers are financially healthy. With QX, you can partner with one of the most reputed credit control outsourcing companies whose core objective is to ensure your business gets paid on time.

Contact QX to know more about how outsourcing credit control can result in a healthy and sustainable cash flow for your company.

Originally published Feb 12, 2024 06:02:50, updated Feb 22 2024

Topics: Credit Control Process, Finance & Accounting Outsourcing