If, as a business, you are too busy handling non-core matters, you will inevitably start losing focus, which in today's economic climate is something you can not afford to do. At this point, outsourcing can prove invaluable but you need to act quickly, professionally and efficiently if outsourcing is to be effective.
Outsourcing in its simplest form is the concept of taking an internal company function and paying an outside firm to implement it. However, if handled badly, it can damage corporate image, weaken a brand, unsettle customers and result in poorer customer service.
Smart outsourcing decisions can add major value though and many organisations are now insisting that their partner tailor its offering to meet their specific needs and rightly so. As no two businesses are the same, why should a ‘one size fits all' approach be taken by outsourcing companies when the main purpose of using an external agency is to save money, improve quality and ultimately free up company resource to focus on core activities?
As outsourcing can be applied to a complete business process such as receivables management or a specialist aspect of a service or function, the business needs must be fully understood and the offering tailored to suit.
Although IT has historically been a more commonly outsourced job function, other areas have expanded rapidly. Logistics, consulting, healthcare and debt recovery are all areas of business that are becoming increasingly popular to outsource, with companies seeking partners who can not only do a specific job well but can add value too. This level of flexibility is key to the success of any outsourced partnership.
In all economic climates, arrears recovery constantly presents new challenges and demands but in today's market these are amplified. The goal of delivering top quality services requires specialist skill, flexibility and innovation and this is where outsourcing truly adds value. Chasing late-payers, for example, can hamper a company's efficiency immensely, therefore outsourcing such a task can lead to falls in service costs of up to 60%, according to research by IBM.
Outsourcing is a popular way to fill voids and provide solutions that free up staff and management time, as well as also being an effective method of reducing headcount without losing service quality. In a difficult economy where losing clients is not an option but reducing overheads is becoming a necessity, this is a real benefit of outsourcing.
The key advantage to outsourcing is flexibility. Contracting outsourcing only for specific tasks means that you can keep adjusting the size of that resource to fit your current needs and budget without having to increase your internal headcount or payroll. Outsourcing also eliminates the need for specialist in-house training, internal systems and controls for these functions, though you should plan to regularly audit your outsource partner's activity to ensure it is in line with your business needs and that their processes are evolving with your market.
Another advantage of outsourcing is that it affords you the opportunity to drive optimum performance from your business partner. By using a third party, under a well written service level agreement, your company has more opportunity to focus on the quality of services provided, whereas if the work is done in-house, there may be company protocols and internal political issues to deal with.
There is also the opportunity to run champion challenger tests, using more than one company to do the work and maximising results. We have found this method works very well for our clients and our own teams, creating healthy competition among the service providers to increase the clients' collection performance.
In the current economic climate businesses must be more proactive with regards to looking for other ways in which to maximise their profitability, specifically within areas such as debt recovery. Working with the correct outsourcing partner in this area can only serve to add value as too many firms wait too long before instructing a debt management specialist, which means your business not only loses interest on that money but, more importantly, puts an unnecessary strain on your cashflow which could prove fatal in today's market.
So, the traditional business case for outsourcing is straightforward: using external specialists for non-core or occasional activities such as credit management will reduce overheads and increase efficiency. For this reason, outsourcing is an attractive option that is set to grow still further in popularity as the economy demands faster and more efficient methods of running businesses, especially collecting cash.
Working with the right supplier allows you to continue to provide the highest levels of service, creating a genuine differentiation in an increasingly competitive market and can ultimately improve your bottom line.
Chris Thornton-Dees is business development director at Close Credit Management. For more information visit www.closecm.co.uk
