Accounts Receivable is typically the second largest current asset behind inventory that companies carry on their balance sheets. It’s an asset that tends to be overlooked and many times mismanaged. It can be a very difficult asset to manage where you not only attempt to collect the monies from sales generated but you also balance customer
relations and sales opportunities.
Companies that maintain management and staffs to oversee Accounts Receivable must assess that cost with the benefits they derive. Cost verses benefit is determined by several factors. The cost of borrowed money over the period time it takes to collect Accounts Receivable along with allocating for potential uncollected funds coupled with the direct
management and clerical support greatly reduce profits and business growth. Benefits should minimize these costs, plus provide added value in the form of enhanced customer service.
Emerging as an alternative to maintaining in house management and staffs is the use of 3rd party specialty service companies. Companies that offer expertise in the areas of credit risk assessment, collection of Accounts Receivable and portfolio management give companies an opportunity to improve their business.
Having an outside service effectively manage the Accounts Receivable portfolio allows Senior Management to focus on other aspects of their business such as production, sales, marketing or inventory control. It also allows for greater flexibility in that 3rd party service companies can increase or decrease their staffing and focus efforts to meet the
needs of their clients. If extra attention is needed to increase cash flow, the 3rd party service company can immediately focus its staffing to meet that need. When the condition improves, staffing is adjusted thereby reducing costs.
If there is a serious past due condition caused by several key, large customers having the proper credit management expertise is critical to protecting the overall quality of the Accounts Receivable portfolio. Here again, the 3rd party specialty company will have that level of expertise needed to address the issue. Recommendations are made to Senior Management that will allow the business relationships to continue and protect the clients overall interests.
Companies find it difficult to always have the exact level of expertise and level of staffing on hand to properly manage an Accounts Receivable portfolio. Because of business cycle changes, economic changes or mergers and acquisitions, companies tend to either have too much or not enough expertise or staffing to ensure consistent cash flow and take proper credit risks. Companies with existing management and staffs that oversee Accounts Receivable need help getting through times of transition. Their expertise and abilities may meet normal business conditions but if major changes occur, they may be overwhelmed. This is where 3rd party specialty services can really make a difference.
They can take on a project, a selected group of Accounts Receivable issues or work directly in conjunction with in-house staff to improve current conditions.
Bucher Financial Group is a 3rd party specialty service company helping companies manage their Accounts Receivable portfolios. With over 9 years in the specialty service business and with 14 management and professional staff members, Bucher Financial Group has helped hundreds of companies make significant improvements to their Accounts Receivable portfolios. Using the latest in technology and the best expertise our clients really appreciate the improvements we’ve made to their Accounts Receivable portfolios.