Squeaky Clean

It's Better To Receive

When you don't issue your invoices in a timely manner, payments are delayed and your cash flow suffers. If this problem sounds familiar, you may want to consider outsourcing your accounts-receivable function.

A small but growing number of firms are offering services that include billing, posting payments and collections, or any part of those functions. One of those firms is The Out$ource Group, an alliance of five companies based in Columbia, Missouri, which handles receivables. When choosing an outsourcing resource, Out$ource vice president Bonnie Baker recommends going with a company that is familiar with the type of work you do and has a reputation you can verify. Discuss the various service packages the company offers. Most services bill on a contingency basis, charging you a percentage of what they collect, but some operate on a fixed-rate basis (such as a fee per month or per account). Calculate what you can save in labor, postage, telephone expenses and other administrative costs, as well as the benefits you'll gain from a more efficient system.

Finding a service to handle your accounts receivable may not be easy; it's a relatively new type of service, and providers are not always easy to identify. One place to start is with collection agencies, many of which are diversifying their services and offering accounts-receivable management. Some bookkeeping and accounting services may also offer this service. You can also find providers advertising in credit and collection trade publications.

Though outsourcing allows you to shift the workload, Baker stresses that it doesn't mean you can shed the ultimate responsibility. "Accounts receivable can make or break a company," Baker says. "We consider this a partnering relationship. We don't want our clients to distance themselves from the process once they set it up."

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This article was originally published in the January 1998 print edition of Entrepreneur with the headline: Squeaky Clean.

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