what are the costs of outsourced credit control?
Contacting customers by telephone to collect late payments and to ask for outstanding invoices to be paid can sometimes be a difficult conversation for a business owner to have. Some businesses do not have an effective credit control process in place, because they do not know if the cost of credit control is affordable for their business.
Effective credit control is paramount to ensuring an invoice is paid. Having a good credit control system in place will maintain and build relationships with customers by creating strong rapport and knowing the right way to collect the debt delicately and effectively.
The cost to hire a professional credit controller in-house would typically be between £15,000 and £27,000 per annum, ranging up to £35,000 - depending on experience. This is quite a significant cost for any small to medium enterprise (SME) and when coupled with the costs associated with sourcing and hiring an employee with the additional training, holidays, sick pay etc., it can be too high a cost for a business to justify.
the costs of bad debt
With bad debts, the costs and time involved with chasing invoices, and prolonged payments - it is understandable why so many SMEs struggle to implement an effective credit control process. Therefore, an alternative option is to outsource the credit control processes and procedures to a credit control company, who can do all of this for a fraction of the cost.
costs of outsourced credit control
Many outsourced credit controllers work on a simple monthly retainer, rather than commission, meaning that a business owner can budget easily and knows what their credit control service will cost – without any surprises. They also have the peace of mind that the sales ledger of the business is being handled efficiently and their customers are being dealt with in the right manner.
Outsourced credit control is more affordable than the cost of having an in-house employee (whether full or part-time). For a low monthly fixed fee business owners can reap all the benefits of having an experienced credit control and collections department. Once you provide a copy of your customer list and sales ledger, your credit control will be proactively and seamlessly managed with any invoice queries handled immediately or referred to you for the right action/next steps.
What are the costs of outsourced credit control? – an example
Company turnover - £500,000 per annum
45 live debtors (customers with outstanding invoices)
400 invoices raised each year
The cost of an outsourced credit control service would be approximately 1% of turnover, therefore approximately £5,000 per year, or approximately £400 per month.
that credit control assist business owners to improve their cash flow. The benefits of using an outsourced credit control team are simple.
Experienced, friendly team of experts
Reduce costs
Avoid bad debts
Increase customer satisfaction
Improve profitability
Consistent credit control process
Bespoke solutions tailored to each business
A good credit controller should feel like a welcome extension of the business and like a part of your team. If you would like to talk about the costs of outsourced credit control for your business please contact our team. We look forward to hearing from you.