As a small business owner, you live and die on your cash flow. You rely on the timely payment of invoices to fund your operations, pay your employees and keep the rent paid on the space you occupy.
When that steady cash flow is interrupted, your finances can spiral down quickly, leaving you without the money you need to make payroll or the ability to take on that next large project.
That makes managing your accounts receivable one of the most critical tasks on your to-do list, but you do not have to go it alone. Indeed, there are many reasons small business owners should outsource their accounts receivable operations. Here are four benefits you should consider.
1. More Consistent Results
When you handle your own accounts receivable operations, you might get a big score, convincing a previously reluctant client to pay up, but that kind of success is often the exception rather than the rule.
With bills to pay and a company full of employees relying on your business, you cannot afford this boom and bust cycle. By outsourcing your accounts receivable operations, you can break that cycle and enjoy steadier and more consistent collections.
2. Specific Expertise
As a small business owner, you are an expert at what you do, but chances are that expertise does not extend to bill collection or the finer points of accounts receivable. Lacking this financial expertise, you are forced to rely on your instincts – and on dumb luck – to collect the money your business is due.
When you outsource your accounts receivable instead, you gain access to specific expertise. The professionals who staff these accounts receivable outsourcing operations understand the rules of the game, and they use that knowledge to produce real results for you and your small business.
3. Surer Cash Flow
Cash flow is a vital consideration for every small business owner, but attaining consistent results is a challenge in the best of times. Unlike employees, who know exactly how much they will be earning for their work, small business owners are always guessing about their receipts, especially when some clients are slow to pay.
Turning to an outside firm to handle accounts receivable is one of the best ways to smooth out the bumps and keep their cash flow as consistent as possible. This can make handling the day to day expenses of running a small business easier to take, so you can focus on serving your clients and financing your operations.
4. Reduced Overhead and Administrative Costs
Small business owners understand the value of reducing overhead costs. They know that every dollar spent on overhead is one less dollar they have to grow their operations and improve their customer service. And while some operations are best handled in-house, accounts receivable is an excellent candidate for outsourcing.
Strategic outsourcing is an excellent way to reduce overhead and trim administrative costs. If you have been looking for a way to streamline your operations and save money, outsourcing your accounts receivable could be a good place to start.
The Bottom Line
If your small business is still handling its accounts receivables in-house, it may be time to rethink that decision. There are solid arguments in favor of outsourcing accounts receivable, including the major benefits outlined above.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.