Why outsourced credit control is a game-changer for UK businesses: Benefits, insights, and best practices.

18/09/2024

In today’s fast-paced business environment, maintaining a healthy cash flow is crucial for the sustainability and growth of any UK business. One of the key components in managing cash flow is effective credit control. However, for many businesses, especially SMEs, managing credit control in-house can be time consuming, costly and complex.

This is where outsourced credit control services come into play. In this article, we explore why outsourced credit control could be a game-changer for UK businesses and offer insights and best practices to consider when implementing this strategy.

Benefits of outsourcing Credit Control

1. Cost-effective

Outsourcing all or part of your credit control function can significantly reduce costs compared to maintaining an in-house team. By partnering with a specialist agency, businesses can avoid the associated expenses such as salaries, additional staff benefits, training and general overheads, as well as the financial and resourcing impact of sick leave and parental leave. Instead, by outsourcing, you pay for the services you need when you need them, often resulting in substantial savings.

2. Expertise and experience

Credit control agencies specialise in managing credit risk and debt recovery. They bring a wealth of experience and knowledge to the table, which means they are well-equipped to handle complex credit issues and reduce the risk of bad debts. Their expertise can help streamline your credit processes and improve recovery rates.

Teams will be trained to industry standards and have expertise in credit control across a wide range of industry sectors. They are mindful of your brand and customer relationships and will conduct credit control as an extension of your business.

3. Focus on core business

Outsourcing allows your internal team to focus on core business activities rather than spending valuable time on credit management. This can lead to increased productivity and better overall performance, as your staff can dedicate their efforts to areas that drive growth and revenue.

4. Enhanced cash flow management

Effective credit control is key to maintaining a healthy cash flow. By outsourcing, you ensure that credit control tasks are handled promptly and professionally, reducing delays in payments and improving cash flow stability. Credit control agencies often use sophisticated tools and techniques to optimise collections and minimise overdue accounts.

5. Scalability and flexibility

As your business grows or changes in line with industry fluctuations, your credit control needs may vary. Outsourced services offer scalability and flexibility, allowing you to adjust the level of support based on your current requirements. Whether you need a temporary boost during a peak period or ongoing support, an outsourced provider can adapt to your needs.

This resource can be flexed to cover staff holidays/sickness or times where internal resource is stretched, or alternatively you could have full-time resource, depending on your needs.

Effective outsourcing – how to get it right

1. Choose the right partner

It may sound obvious but it’s important to highlight that not all agencies are equal. Selecting the right credit control agency is crucial to a successful partnership. Look for a provider with a solid track record, industry experience, and a transparent approach. Consider their reputation, client testimonials, and the range of services they offer. A good partner will align with your business values and goals.

2. Define clear objectives

Before engaging with an outsourced credit control provider, clearly define your objectives and expectations. Outline the specific tasks you want them to handle, such as credit checks, or debt recovery after a defined time period or on particular accounts. Establishing clear goals will help ensure that both parties are on the same page and can work towards common objectives.

Likewise, determining the tone and approach when interacting with customers on your behalf is essential. An experienced credit control agency will have the capability to define their approach based on your direction and can tailor this per account/circumstance, if needed.

3. Maintain communication

Effective communication between your business and the credit control agency is essential for success. Regularly review performance reports, discuss any issues or concerns, and provide feedback. Open communication helps build a strong working relationship and ensures that the agency understands and meets your needs.

4. Monitor and evaluate performance

Regularly assess the performance of your outsourced credit control service. Monitor key metrics such as collection rates, average days outstanding, and overall impact on cash flow and customer relations. Evaluating performance helps ensure that the service is delivering the expected results and allows you to make any necessary adjustments.

5. Integrate with your systems

Ensure that the outsourced credit control provider integrates smoothly with your existing systems. This could include accounting software and any other relevant tools. Integration helps streamline processes, reduce errors, and improve overall efficiency.

Success story

Whilst all businesses strive for fast growth and success, the reality is that this often brings its own challenges. Our client, aware of the importance of credit control for his business, enlisted Hilton-Baird Collection Services to take control of the process from invoice to payment. Find out how Construction Recruitment Services Ltd benefits from outsourced credit control.

Conclusion

Outsourcing credit control can be a strategic move that brings numerous benefits. From cost savings and access to expertise to improved cash flow management and increased focus on core activities, the advantages are significant. By choosing the right partner, setting clear objectives, and maintaining effective communication, you can maximise the benefits of outsourced credit control and position your business for continued success.

If you’re considering outsourcing credit control, take the time to research and select a provider that aligns with your needs and goals. With the right approach, outsourced credit control can indeed be a game-changer for your business.

To speak to our team about how outsourced credit control could work for your business, call 0800 9774848 or get a credit control quote.