THE BENEFITS OF OUTSOURCING COMMERCIAL ACCOUNTS RECEIVABLE TO PCM
Credit collection outsourcing can be a valuable tool for companies looking to focus on the business of their business. In many cases outsourcing is often one of the most effective ways to maintain margins while ensuring efficient sales and operational support. Depending on the creditor’s industry, a whole spectrum of other credit collection factors are to be considered when making an outsourcing decision.
WHY YOU SHOULD CONSIDER PCM OUTSOURCING SERVICES
Since 2005 PCM has provided companies across many industries an effective alternative to creating and managing a full-scale collection function. Based on an assessment of your specific needs we will develop a credit collection plan that will:
• Increase recovery rate/decrease days sales outstanding
• Reduce overall collection costs
• Save your business HR related expense of hiring and training
• Provide specialists who will apply best practices
• Provide staff that’s dedicating 100% of their time to your business
• Eliminate the drudgery of administrative tasks, skip trace, and asset-recovery
• Ensure that you are not the “bad guys” who have to remind clients they owe you money
• Free up time for you to focus on strategies that drive your business
• Represent you in negotiations, as needed.
Industrial Equipment Parts Supplier – Poor ERP (Enterprise Resource Planning) System Implementation
Situation – A large supplier of industrial equipment parts and services switched their ERP system; however, errors occurred in the pricing data of all components as well as the individual customer discount plans, resulting in significant billing issues and an almost complete stop in payment of their receivables. DSO (Days Sales Outstanding) climbed to 82 days very rapidly resulting in the supplier’s bank getting involved, concerned about the firm’s ability to service its debt and trade payables. The firm hired over eighty temporary accounting staff to begin reconciliation and error corrections. More staff were required; however, their building was at capacity and couldn’t accommodate more people. The company’s Credit Manager reached out to PCM looking for a team of six staff that could be located offsite and managed by PCM for a period of up to eight months.
Solution – PCM immediately hired a mixture of five junior and intermediate credit and collection staff, as well as one team leader for a total of six. Located at PCM’s site, the client provided secure laptops to connect to their servers while PCM provided space, phones, and hands-on human resource management. The credit team was only to manage the clients “Bronze” customers with balances of $5000 or less. PCM established specific KPI’s (Key Performance Indicators) for the team members and thoroughly reviewed the client’s customer service metrics and policy.
Outcome – The team quickly distinguished itself as competent, demonstrating their ability to reconcile accounts, effectively communicate with end customers and internal sales staff. The “Bronze” customer list was fully resolved within 45 days and not eight months. The client recognized the PCM team’s ability to get cash flowing while attending to customer service inquiries and gave the team the “Silver” customers to work on next. The PCM team ended up working on the clients “Platinum” level clients and managed to wrap up the project two months early. The clients DSO went from 82 days down to 47. At the end of the project, the client offered five of the six team members a full-time job working directly for the company.
WHEN IT’S TIME TO THINK ABOUT PCM OUTSOURCING SERVICES
Every credit collection challenge is unique. However, it is our experience that the companies who would benefit from outsourcing, share a number of the same characteristics:
• Productivity is lagging, resulting in out of control receivables
• There’s not enough staff to manage the process resulting in poor morale, high turnover and too many mistakes
• These mistakes significantly impact client service, acquisition and retention
• There is an operational need to reduce operating expenses
• Days sales outstanding hurts cash flow and strategic investments
• There is an ineffective, underqualified internal team
PCM OUTSOURCING PROCESS REVIEW
Once engaged we will schedule a free consultation to audit and assess your:
• Credit approval systems, policies and terms
• Invoicing and account reconciliation processes
• Reminder procedures for slow-payers; bad debt follow up; and credit hold policies
• Internal talent gaps
• Documentation policies
• Fraud management protocols
• Ability to transmit and receive data and ability to access information
• Ability to work in an outsourcing environment
From this meeting we will present our findings, recommendations and all cost considerations.
Contact us and a professional accounts receivable expert can answer any questions you may have about our outsourcing services.
Toll Free: 866-266-0117