Topics: Accounts Receivable Process, Finance & Accounting Outsourcing

The Executive’s Guide to Selecting an Accounts Receivable Outsourcing Partner

Posted on May 01, 2024
Written By QX Global Group


Cash flow plays a crucial role in determining a business’ financial health and can directly impact growth. Therefore, it’s not surprising that CFOs and finance leaders are often on the lookout for strategies to to enhance the cash flow. They achieve this through predictive analytics, advanced forecasting, and optimizing efficiency in financial planning and management.

One of the easily achievable strategies for improving cash flows is maximizing accounts receivable (AR) potential. However, this is easier said than done. A combination of a legacy approach to AR, an inability to sustain technology investment in the AR tech stack, lack of process scalability, and high operational costs often act as barriers to improving AR efficiency.

Outsourced accounts receivable service providers can help tackle these challenges. However, only firms with robust capabilities and a proven track record in managing accounts receivable effectively across various businesses can succeed, regardless of their scope of work.

Choosing an Accounts Receivable Outsourcing Partner

As businesses strive to optimize their financial operations to boost cash flow, the decision to select an accounts receivable outsourcing partner becomes not merely operational, but strategic. It is imperative that you pick an outsourcing firm that addresses all your concerns about outsourcing, can manage the volume of work, and improves efficiency by deploying the right people, processes, and platforms. The potential outsourced accounts receivable services firm should be able to handle your existing work volumes and scale to meet increased workloads.

Here are some of the factors one must consider while choosing the right outsourcing partner for accounts receivable management:

  • Industry Expertise & Experience

The primary criterion for selection must be the expertise and experience the outsourcing provider brings to the table. While every provider will tout their capabilities, evaluating their reputation can be done by examining their client roster and requesting client references. Additionally, consider scheduling a call with their accounting team to directly assess their proficiency with the AR tasks you intend to assign.

Your main focus should be on partnering with an outsourced accounts receivable management company that has experience working with clients in your industry. It is crucial to gain a detailed understanding of their core capabilities. If this information is not readily provided, it may be wise to reconsider your association with them.

  • The Human Element

It is estimated that the US has a shortfall of over 300,000 accountants, presenting a significant challenge for businesses seeking access to the right accounting talent. This impacts scalability and existing accounting teams stretching themselves thin. While outsourced accounts receivable services offer the advantage of labor arbitrage, it’s crucial to ensure that the human capital being leveraged possesses the necessary qualifications and expertise in accounts receivable functions. Tasks such as credit control, invoice generation, customer query resolution, and revenue reconciliation require both a strong theoretical understanding and practical proficiency. Therefore, ensuring the outsourced team demonstrates these competencies is crucial.

  • Cutting-Edge Tech Infrastructure

Your outsourced accounts receivable management team should not only be proficient in industry-standard software like SAP Business One, DocuWare, and Tungsten Automation but also familiar with the accounting software your business uses internally. This compatibility is critical for ensuring seamless integration.

Also, think strategically. Evaluate how the outsourcing provider’s technology capabilities can bolster your business’ accounting framework. The ideal provider should be capable of developing custom software solutions that not only add value to your existing tech stack but also introduce advanced capabilities such as AI/ML and robotic process automation. These innovations prepare your AR processes for the future, enhancing efficiency and driving ROI.

Useful Read: Role of Technology in Optimizing Accounts Receivable

  • Security and Compliance

The global average cost of a data breach is a mammoth US$4.45 million. This puts the spotlight on the need to establish and follow security protocols that ensure data security. Additionally, ensuring that finance and accounting processes adhere to key industry standards and comply with specific industry or regional regulations is essential. When selecting an accounts receivable outsourcing provider, it’s vital that this partnership does not compromise your internal governance, security, or compliance standards.

Choose a provider that subscribes to the globally accepted ISO 9001:2015 quality management system and an ISO framework that ensures standardization and high quality of the AR process. Moreover, the provider’s internal framework should comply with SOC 2 Type II standards, ensuring perfect alignment with your own data security and compliance frameworks. Importantly, if your business faces security challenges or struggles with regulatory compliance, a skilled outsourced accounts receivable management firm should not only fill these gaps but also enhance your overall security posture.

  • Proper Cultural Fit

The team working on your AR projects should be able to do so as an extension of your internal team. This requires alignment with your business’s operational culture, including communication styles, preferred channels, work timings, and behavioral standards. Misalignments in these areas can lead to conflicts stemming from poor interpersonal relationships.

When evaluating potential partners, it is critical to provide clarity on your way of working and expectations from the outsourced team in terms of behavior and engagement. Move forward only if you think the cultural fit exists or the provider is flexible enough to fit seamlessly into your existing ecosystem.

Need Help with Accounts Receivable Management?

The ideal partner is someone who can understand your needs and doesn’t come on board only as a services partner but also as a long-term growth driver. QX comes good on all the qualities you expect from an outsourced accounts receivable service provider. We are committed to transforming AR management through adherence to accounting best practices, leveraging our deep industry experience, and utilizing cutting-edge technologies. We focus on leveraging digital transformation initiatives to help clients benefit from automation and real-time insights into the AR cycle. With our services, you can achieve enhanced operational efficiency in AR while simultaneously reducing operating costs by 40-60%.

Originally published May 01, 2024 01:05:50, updated May 01 2024

Topics: Accounts Receivable Process, Finance & Accounting Outsourcing

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