By deciding to outsource credit and collection responsibilities, companies are also choosing to focus in-house staff efforts on core competencies. That is, your company’s trained professionals will direct their efforts toward granting credit, building customer relations, or managing better key accounts depending on the scope of the outsourcing arrangement. By working with an outsourcing vendor, your company, in effect, increases in-house staff without the cost associated with new hires. 

For outsourcing to work successfully your relationship with an outsourcing vendor must be a partnership. The partner you choose does make a difference. It is a critical decision that requires a thorough up-front evaluation of all potential outsourcing partners. 

Knowing Your Operation 

Effective outsourcing requires you and your outsourcing partner share a thorough understanding of your company’s procedures and special characteristics. Outsourcing by its very nature is a customized procedure. Your partner must perform an analysis of your receivables portfolio in order to design, with you, a customized procedure that optimizes staff resources, reduces costs, and improves the quality of your receivables portfolio. The program you choose will depend upon a number of factors including your staffing constraints, volumes, the range of your credit extensions, the vagaries of your markets and so forth. 

Your outsourcing partner must have the technological proficiency to interface smoothly with your company’s software. You have the option of either letting your outsourcing partner access your system or of transferring data to their system yourself. Either way, make sure your outsourcing partner has the technological wherewithal to make this a seamless interface. Outsourcing projects can be handled manually, however, the most cost-effective outsourcing relationship is likely to include more sophisticated methods of data transfer and contact with your customer base. 

You also need to determine if potential outsourcing partners have the capacity to handle your volume of accounts and the specific requirements of your company. Find out how many personnel will be assigned to your project. Find out if the outsourcing vendor uses predictive “power” dialers to optimize call results. 

Remember that one of the key elements of outsourcing is that calls are being made to your customers in your company’s name, and there should be no suggestion of a third-party contact. From your customer’s point of view, your outsourcing partner is transparent. For all the customer knows, they are dealing directly with you. 

On the incoming side, your outsourcing partner should have a toll free number that is used exclusively for your customers. That phone should be answered in your company’s name. Although your outsourcing partner sets up a toll free number for your customers, they should still be directing your customer’s payments to your lockboxes or other remittance address. 

Outsourcing is as much about customer relations as it is receivables management. Successful outsourcing projects involve solving customer problems before they become collection problems. Investigate the training and expertise of your outsourcing partner’s employees. Are they collection oriented or customer service oriented? Do they have consumer collection backgrounds, or are they experienced with commercial credit and collections? You want the people who are contacting your customers to have the customer relationship skills that match your company’s needs. 

 Outsourcing, not just credit and collection experience counts. Outsourcing is very different from traditional third-party collections. Obtain references and talk to other clients of the outsourcing vendors you are considering. Ask these references about the value and quality of the vendor. Make sure you have met with the project manager and staff who will handle your customer base. Visit potential outsourcing partners’ facilities and get a feel for the operation and the expertise of their personnel. 

 The communication you establish at this meeting will be the foundation for your relationship with your outsourcing partner. It is important that you have confidence in your outsourcing partner’s technology and their staff who will be working of your. Good communication with your outsourcing partner is critical to the success of your outsourcing program.

 Also, make sure your outsourcing partner can produce the reports you need to manage the outsourcing project. If the outsourcing vendor is experienced they will be able to accommodate all your reporting requirements.

 Conclusion