Your small business relies on the timely payment of invoices to cover payroll, purchase supplies and equipment and fund growth. When your steady flow of cash is interrupted by late paying customers, your operations will suffer, and your finances can quickly spiral out of control. If your cash is tied up in accounts receivable, it will also hinder your ability to take on the next project and larger orders.
If your business is struggling to manage past-due receivables, it might be time to consider the advantages of outsourcing. With a proactive approach and some outside assistance, you can significantly improve how quickly your small business gets paid. Here are five benefits of outsourcing accounts receivable you should consider:
Streamline the billing and payment process
By outsourcing your business’ accounts receivable, you can skip the lengthy process of sending invoices through the mail and gain access to automated payment services. This allows you to not only streamline the billing and payment process, but also increase accuracy, timeliness and overall efficiency. Dealing with past due and unpaid invoices and collection problems can distract you and your team from tasks that further growth. Depending on the third party you outsource your accounts receivable to, you can also secure assistance with other back-office tasks, like credit management and maintaining records. In turn, you and your employees’ can focus your valuable time and talent elsewhere.
Reduce administrative overhead and costs
As a small business owner, you understand the value of reducing your business’ overhead costs. Every dollar tied up on overhead is one less dollar you can spend on growing your operations. Strategic outsourcing is a great way to reduce overhead and administrative costs and improve your bottom line. Letting someone else handle your accounts receivable eliminates the need for an accounts receivable department within your own office. Rather than spending money on expensive equipment and employing staff to manage billing and collections, you can focus your time and cash on improving sales and building strong customer relationships.
Secure specific financial expertise
Small business owners are known for being extremely ambitious and results-driven. Regardless of what is thrown their way, they just push through and get things done. While the is an amiable quality to have, it is important to avoid shouldering all of the responsibilities. Some tasks are worth securing specific expertise. If bill collection and accounts receivable are not your strong point, outsourcing your accounts receivable will give you access to specific financial expertise. These professionals can help you produce real results for you and your small business.
Gain access to consistent cash flow
Unlike employees, who know exactly how much they earn for their work and when they will be paid, cash flow can be a guessing game for small business owners – even during the best of times. When your business waits 30, 60 or even 90 days to receive payment, invoices can quickly pile up. This unpredictable ebb and flow of cash flow can make it difficult to cover expenses and fund growth. In addition, research shows that the longer it takes for a business to collect on its accounts receivable, the less likely it will ever collect that debt. When you partner with a third party – like an invoice factoring company – you can secure the help you need to manage past-due receivables and gain access to consistent cash flow.
Improve customer interactions
Building and maintaining a positive relationship with your customers plays a huge role in timely payments. Many unpaid invoices are the result of insufficient communication between the business and the customer. When you outsource accounts receivable to a seasoned third party provider, they deliver the highest levels of expertise and services to you and your customers. If an invoice becomes an issue, their assistance can help you swiftly work through the situation. Their intimate knowledge of the invoice process ensures the interactions between your company and your customers are both positive and professional.
All in all, while most operations are best handled by you and your team, accounts receivable is one task your business can benefit from outsourcing. Effective management of your business’ outstanding invoices not only boosts cash flow, but also leads to long-term financial health and greater flexibility.
At Bold Business Capital, we help our clients quickly secure the working capital they need to grow and maintain promising relationships with their customers. Our invoice factoring services, for example, help you manage past-due receivables and secure the cash you need to operate smoothly. Invoice factoring allows you to turn your business’ accounts receivable into immediate working capital. The process involves your business selling its invoices to a factoring company, at a small discount, in exchange for a quick advance of funds. You can have cash on hand in as little as 24 hours, there is no debt to repay and you secure unlimited funding potential.
Would you like to learn more about how invoice factoring works and how it can help your business grow? Contact our cash flow experts at Bold Business Capital to get started.
