In recent times, there has been a significant increase in offshoring accounting services. These services range from simple tasks like accounts receivable outsourcing and Outsourcing accounts payable to complex tasks like payroll and share option schemes. All tasks related to accountancy, starting from Bookkeeping to finalisation of accounts, all can be outsourced to offshore accounting service provider.
Although accounts receivables and payables might seem an easy task to manage, but for some companies it can be really stressful. When you are selling your services or good in cash it is quite easy to manage the accounts and cash flow. When you start making these sales on credit basis, it gives rise to accounts receivables. These accounts receivables can be easy to manage when small in number. But with growth in business, accounts receivables also start growing.
It is a good strategy for growth of business to give credits and discounts. But managing the accounts receivable is another job. If you fail to recover money on time, you will fail to maintain your cash flow. For any business to survive, a healthy cash flow is much more important than its profit. A business with losses can survive few years, but a business with defaulting cash flow will crash within months. To get away from this headache of always thinking about the cash flow, businesses tend to go for accounts receivable outsourcing.
Now the question is how you benefit from this type of offshoring accounting services. When you go for accounts receivable outsourcing, you also transfer its headaches with it. It becomes the responsibility of the service provider to manage the accounts receivables on day to day basis. These service providers keep record of all the outstanding receivables. These records are maintained on online or cloud accounting software usually. This makes them readily available for the outsourcee and the outsourcer. At any point in time the outsourcer can view reports on their receivables. It is duty of the accounting outsourcing service provider to alert the outsourcer if there is any customer that has gone beyond the agreed credit period. It is also their responsibility to pursue such customers on regularly basis and ask them for payments. If a customer is not responding to their emails or phone calls, they can also take legal actions on behalf of the company.
Another major responsibility of these accounts receivable outsourcing service provider is to closely monitor the cash flow of company. They calculate the turnover period, compare it with companies own performance and the industry average. If something alarming is seen, it is reported to the outsourcer. This in turn helps them to tighten credit terms and pursue their customers more vigorously. Accounts receivable outsourcing is interconnected with Outsourcing accounts payable. If receivables are being managed well only then the company will be able to generate enough cash in time to pay off their creditors. Thus accounts receivable outsourcing can be an effective tool for growth of company. Not only you benefit from professionals taking care of your receivables and cash flow, but now you will have more time to focus on other key areas for your business growth.