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What are Accounts Receivable?
The accounts receivable function is essentially responsible for managing any and all invoiced payments for services rendered that are yet to be paid by customers. Businesses are leaning toward outsourced accounts receivable services to get the job done. There are quite a few reasons for this shift towards outsourced accounts receivable solutions, but before we proceed, let’s talk about the relevance of the accounts receivable function in 2023, and why it is worth investing in.
The Importance of Accounts Receivable
With the incoming recessionary spell, experts at EAccelerated in a publication titled “How to Manage Cash Flow During a Recession” highlighted the significance of cash flow management in the current business climate. Maintaining positive cash flow is crucial for businesses today if they wish to endure the rising recessionary pressure, and one of the best ways to combat cash flow problems is to optimize the accounts receivable function. Put simply, cash flow requires a consistent and timely influx of cash into the business, which is the responsibility of the accounts receivable function.
Entrepreneurs should consider optimizing their accounts receivable processes and investing in financial technology (Fintech) as well as strategic development of the accounting function as a whole. The age-old problem with accounting, however, continues to haunt businesses today: the cost.
Maintaining an in-house accounts receivable function is absolutely impossible for most small businesses currently, thanks to the rising salary demands from the workforce paired with inflationary pressure. The most many businesses can manage is hiring a part-time bookkeeper, and even that may soon not be possible. In this climate, outsourced accounts receivable services have become the hope for small businesses across the US.
What are Outsourced Accounts Receivable Solutions?
Outsourcing is a major game-changer in today’s business climate. Thanks to the innovation of cloud accounting technology, it is no longer required for accounting professionals to be present in the office. Frankly, most backend business and administrative functions can be carried out remotely, and the success of the Work-From-Home model amid the Covid-19 pandemic stands as proof of the concept.
Outsourced accounts receivable solutions essentially entail recruiting accounting professionals outside of the US to manage the accounts receivable function through cloud accounting. Basically, outsourced accounts receivable solutions like the ones provided by ExpertiseAccelerated give US businesses the chance to connect with and delegate the accounts receivable function to offshore accounting professionals. There are many reasons why this is a good idea, and why 37% of US businesses continue to outsource their accounting needs outside of the US. Let’s discuss some of the many reasons why outsourced accounts receivable management solutions are game-changing for US businesses!
Why are Outsourced Accounts Receivable Solutions Game-Changing?
They are Cost Efficient
Think about it, the only reason accounting professionals are so absurdly costly in the US is because of the exorbitant cost of living of the country. Because of this, US-based accounting professionals and firms end up far more costly than their offshore counterparts. This is the key reason why outsourced accounts receivable solutions are all the rage today, they are very easy on the pockets and do not sacrifice the quality of services rendered. Take EA for example, EA’s outsourced accounts receivable management solutions cost around 40-60% less than US counterparts while maintaining gold-standard quality under the watchful eye of industry veteran Mr. Haroon Jafree.
They Support the Core Team
Now more than ever, businesses require the undivided attention of the core team at all times to function smoothly. Entrepreneurs cannot afford to be bogged down by mundane tasks such as accounts receivable, which are still very important, but simply cannot be a priority on the core team’s to-do list. Outsourced accounts receivable management becomes the obvious solution to the problem, with occasional entrepreneurial oversight. This is by far the most understated yet key reason why so many small and medium-sized businesses in the US are opting for outsourced accounting solutions: it’s convenient.
Entrepreneurs already have to deal with a myriad of problems daily; piling accounting woes onto the pile would only make things worse. It is just easy and convenient to delegate the responsibility to a third-party service provider that can get the job done faster and more efficiently.
Many companies are also opting to automate routine tasks in the accounts receivable processes. Read here to know more about the impact of technology on accounts receivable procedures.
They Mitigate Error and Fraud Risk
Making a mistake in accounts receivable can be severely detrimental to the business. For example, if a payment is incorrectly invoiced for $40 instead of $4000, the business incurs significant financial damage from such a simple clerical error. There can be no room for error when it comes to accounts receivable management, and hiring a professional is the best way to prevent any unnecessary damage to the business from clumsy mistakes. Outsourced accounts receivable solutions are once again the best option for most US businesses.
Speaking of mistakes, some may not be as innocent as others. Safeatlast reports that 95% of businesses have been the target of embezzlement from employees, and accounts receivable is one of the most vulnerable functions in this regard. Employees may generate false invoices and pocket portions of collected payments for themselves. This is a prevalent issue in the business landscape, and cloud accounting is an excellent way to curb this behavior.
By hiring outsourced accounts receivable management services, US entrepreneurs are limiting all contact with their hired professionals to the digital space. This means that if any shady activity occurs, there is a clear paper trail to follow and catch any potential fraud before it escalates. On top of this, outsourcing firms have checks and balances in place to monitor talent behavior, which drastically reduces your business’ chances of succumbing to fraud.
Outsourced accounts receivable solutions are not just streamlining the financial operations of businesses, but they are also providing a competitive edge by freeing up time and resources to focus on growth and innovation.
These were just some of the reasons why US businesses are slowly moving towards outsourced accounts receivables, among other accounting functions. They are affordable, convenient, and secure. It is to be noted however, that not all outsourced accounts receivable solution providers are created equal, there are varying levels of quality like in every other industry, and entrepreneurs must do their due diligence to consider which service provider fits them best.