As a small business owner, you probably have a lot of expenses to meet. For this very reason, outsourcing would appear to be a very lucrative option, when it comes to saving costs and increasing efficiency. At the same time, you would probably also know that it is quite hard to get working capital to meet your daily business expenditures.
During times of shortage, it becomes very necessary for businesses to outsource their accounts receivables
, so that businesses obtain efficiency and cost saving benefits for their business operations.
Here are some of the pros and cons of business outsourcing, which can shed some light on why it’s important to outsource account receivables.
- Cut Costs: Why does any business want to outsource their operations? Simple reason is, to cut costs. Hiring your own in house accounting staff, purchasing the equipment as well as maintaining everything in the right order can be a costly task, one which any business would want to avoid. By outsourcing, your business can benefit immensely by doing the job at a much lower cost.
- Efficiency: Efficiency can be greatly enhanced, as soon as the work is outsourced. The same work, which might be done manually, can be automated and experienced staff can be hired at lower costs, to enhance efficiency.
- Round the clock coverage: Many businesses have round the clock service requirements. Outsourcing is often considered to be a great tool, especially, when it can provide massive round the clock coverage to small businesses and companies alike.
- Automated tracking: Even though the work is being done offsite, there are a lot of ways and means to track the work being completed. Modern technology allows everyone to stay on top of the completed work and keep an extensive track of what’s completed and what’s pending.
- Error reduction: Every outsourced business has elaborate quality checks in place to ensure maximum quality control for the clients. This way, top notch quality can be maintained, without having to worry too much about errors and wrong information handling.
Since every coin has 2 sides, even outsourcing has its own cons. Here’s a list of the negatives of outsourcing account receivables to other parties.
- Loss of control: When work is outsourced, there is always a degree of loss of control for the client. Since the work is usually going offsite, there is no direct supervision of the client on the work being done, which can often result in a loss of control.
- Dependency: Even though cutting costs is the main agenda, there is often a dependency which develops over a period of time. This dependency could mean that you are waiting for work to get delivered, or waiting for things to be completed, etc.
- Cost of getting work done: Despite outsourcing, there are often a lot of hidden costs which are not considered during the initial planning phase. These costs would come to the fore when the work is outsourced. These costs can often end up as added burdens instead of reducing the costs for the company.
Keeping all the above points in mind, it’s becomes clear why accounts receivable outsourcing
is of prime most importance for businesses and companies alike.