Why Business Owners Should Outsource Their Accounts Receivable

Business team checking account receivable data on the laptop while looking with magnifying glass

The Top 5 Benefits to Outsourcing Accounts Receivable

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 capital you need to make payroll or even keep the lights on.

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 five 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 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.

Related: Selling Accounts Receivables to Finance Your Business

2. You Gain 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 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 product 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 Costs and Adminstrative Work

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.

Related: How Much Are Your Accounts Receivable Costing You?

5. Potential Tax Advantages

Running a small business can be a taxing proposition. Small business owners face enormous tax burdens, and it can be difficult to reduce the amount they owe.

One way to achieve those tax savings is through strategic outsourcing. By taking certain functions, including accounts receivable collection, outside the company, businesses can take additional write-offs and reduce the size of those quarterly tax payments. Big businesses use these tax savings strategies all the time, so it is only fair for their smaller counterparts to do the same.

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 five major benefits outlined above.

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Whether your business is thriving and you can’t keep up, or you are waiting on clients to pay, Universal Funding can help your growing company. Call us at 800.405.6035 or complete our rate form today to learn more about invoice factoring and how it can improve your company’s cash flow.

About Universal Funding

Universal Funding is a nationwide invoice factoring solutions leader, supporting growth-focused businesses with scalable factoring solutions. With its invoice factoring, payroll funding, and purchase order financing services, Universal Funding provides clients with the working capital needed to grow and support their businesses without taking on new debt. Ranked as one of the nation’s top invoice factoring companies, Universal Funding provides cash flow financing for businesses all across the United States.