Receivables Outsourcing

If you have been spending a lot of time analyzing how much money is owed to you by your clients, you have an option. This function can be outsourced abroad where skilled resources will do this function for you at a very affordable cost. The concept of receivables is so easy to understand and applied worldwide that outsourcing of this function involves minimum fuss and transitional requirements.

The term receivables is closely related to the invoicing arrangements between the vendor and the client. When a vendor provides a service to the client, he expects to be paid unless he agrees to provide the service free of charge. After the client receives the service deliverable, the vendor sends him an invoice informing him of the amount which he needs to pay the vendor for the service provided. The client is provided a due date for making the payment and the client would need to pay the vendor by the due date of the payment else he would be charged an interest.

More importantly, there are different terms used for terming the due dates of the payments.

  • Net30 - This means that the payment is due till 30 days from the date of invoicing the client.

  • Net45 - This means that the payment is due till 45 days from the date of invoicing the client.

  • Net60 - This means that the payment is due till 60 days from the date of invoicing the client.
The trend nowadays is to give the clients breathing space in order to fulfill the payments for which they could be given 10-15 days additional to the due dates.

The 3rd party companies to which receivables outsourcing is done do a variety of functions. They could prepare the invoices for the company so that the company can send the invoices to the clients. The 3rd party companies could also do bookkeeping of the company's accounts by cross-verifying the invoices sent and the payments received data. I have also heard that some companies also maintain the Sales ledger to make receivables outsourcing a complete financial services outsourcing cycle. The development of technology has ensured that these 3rd party companies can work out of a desktop web-based software making the receivables outsourcing activity as a seamless exercise. The internet-based model has changed the 'paper-load' image of receivables to providing financial services online.

It is these changes coupled with the ever-perennial cost factor which allows lot of companies in countries like USA, UK etc to outsource receivables work to countries like India, Malaysia. India for example, has a large pool of English speaking graduates skilled in commerce and economics. With wages at the lower end of the spectrum, quite a few of the receivables outsourcing jobs have found its place in India.

With many countries catching up on this wave of receivables outsourcing, you can choose from a wide array of choices.