The old adage “if you want something done right, do it yourself” was first coined by Napoleon Bonaparte and is still repeated quite often today. The question, however, is when do you delegate that something to someone else? According to Grand View Research, the BPO market will be worth $405.6B by 2027. Companies can outsource their human resources, procurement, accounting, customer service, IT, marketing, etc.
1st party collection programs provide for customer outreach as well as collections. Collection agencies, whether it’s in 1st or 3rd party, are in the communication business according to Tom Gillespie, President, ACCESS Receivables. The decision to outsource comes from a thorough analysis of what’s happening internally.
Staffing, expertise and cost are the key attributes to this decision. Has call center volume increased? Do you have enough staff to manage that increase? Are those employees pulled too thin and need to be focused on current customers? Do they have the collections expertise to manage your receivables through the various debt buckets and do they follow your treatment plan timely? If you outsourced your internal collections, would you be able to deploy your human capital in better ways? Is it more cost effective to have internal staff with FTE costs vs. paying a vendor? Are your sales reps tasked with collecting on open invoices with commission clawbacks in place? Tension is now put in between the sales rep and the customer. Sales is a relationship business and salespeople should be left to sell. A/R departments should manage the receivables. This allows each department to focus on their core competencies. Outsourcing your receivables solves issues of:
- Managing write-offs
- Not enough internal staff
- Internal staff are ineffective
- Influx of A/R after a merger/acquisition
- Increased A/R due to strategy changes
- Improve cash flow while reducing expenses
Finding an expert partner
Collections is a very niche industry. If it was as simple as mailing an invoice and getting paid, we wouldn’t need collection experts. We would be sending out massive amounts of letters and invoices and the United States Postal Service would be thrilled at the uptick in revenue. But, it’s not that simple. There’s a science to it, a science an expert partner can bring to the table and you need to engage a partner for their expertise.
While a BPO provider is that expert, you, the client, dictate how the process will be implemented. You may still work the accounts internally but for a shorter period of time, say 30 days. Then your partner takes over. Programs should be designed with this in mind:
- Set a specific time frame for them to work accounts
- Determine if there is a need for them to manage inbound calls as well as outbound
- Set up secure access for payment posting in your system and for obtaining invoices
- Provide them with an email within your system for communicating with customers
- Set up a process for dispute handling
- Set parameters for settlements
If your BPO vendor also handles 3rd party collections, an auto-roll process can be implemented to manage the receivables from early stage to full collections seamlessly.
The technology utilized in 3rd party collections can be deployed for early stage receivables. Dialers can manage calling campaigns and provide for auto dialing for landlines with manually approved calling for cell phones. Cell phone scrubs and call recordings ensure TCPA and other regulatory compliance. Letter vendors provide a more efficient and cost-effective solution. Mass email campaigns, including final demand notices, and SMS messages can be implemented to reach your customers. All of these solutions require time, energy and money to deploy internally. Oh and let’s not forget a robust collections system. Without it, your accounts are not managed properly.
There is always more than one way to skin a cat. Pricing of BPO receivables management can be done different ways – commission based, based on volume of accounts or per FTE. Per FTE cost provides a fixed cost for your company every month. FTE count can include a supervisor on your project and the number of collection representatives can be adjusted based on the volume of your receivable needs.
There are many benefits to a BPO collections program.
- Improvement of collections
- Reduction of write-offs + reduction of accounts rolling into 3rd party collection
- Insight from customer feedback will shed light on the customer life cycle.
- Management for the scaling of staff
All of this creates a win-win for your company, your customers and your BPO partnership.