Successful outsourcing of collection activities: a win-win partnership
Outsourcing collection activities is a decision that hundreds of credit managers have taken over the past two decades. That’s because firms now see themselves sitting within a collaborative ecosystem of organizations who are not “just” vendors or suppliers. Rather, these organizations – each performing a specialist role – are partners.
A strong outsourcing partnership enables firms to:
- Focus on delivering shareholder value – By collaborating with a partner on collection activities, firms can concentrate their resources and efforts on the aspects of their business that will deliver competitive advantage. For example, performing collection activities in-house can require extensive investment in infrastructure – such as the purchase of an accounts receivable technology platform as well as the hiring of the staff to operate it. Outsourcing collection activities means firms can avoid having to make these expensive investments, enabling them to allocate those financial resources to other, revenue-generating areas. Additionally, it usually means the business can bring its products and services to market faster. In these ways, and others, outsourcing primary services can help firms increase shareholder value.
- Access deep expertise, on demand – The increasingly highly-regulated nature of industries dealing with household customers means that doing business requires significant capabilities across the entire governance, risk and compliance (GRC) spectrum. However, investing in risk, compliance, internal audit, and quality assurance teams can be expensive. Demand for this talent is strong, particularly for individuals with proven capabilities. Additional expertise – such as people experienced in handling Financial Ombudsman complaints, or in working with vulnerable customers – can also be difficult to find. Co-operative partnership means that all of this expertise is available when it is required, at a fraction of the cost of hiring in-house.
- Know that customers are being handled professionally – Firms today are all too aware of the risks that they face – compliance risk, reputational risk and third party risk management are particular areas of concern. Collaborating with a collection servicing partner means that the approach to customer engagement is tailored to meet the individual firm’s business and compliance needs supported by robust and secured data management processes. As a result, regulatory obligations are met in a cost-efficient way, and the firm’s reputation is enhanced through professional customer service.
- A strategic choice to be carefully assessed: To ensure a long term, successful partnership Firms should deeply understand the culture and values of potential partners. It’s important to choose the right sourcing provider, and it can be helpful to get recommendations from other firms who already have a relationship with them.
When establishing a collection servicing partnership with an outsourcing provider, it’s essential to know that these capabilities are available. The firm needs to be sure that the potential partner is able to demonstrate its strength in all the above areas.
Executed correctly, collaboration on collection servicing with the right partner can transform a firm’s approach to the markets it serves, as well as its ability to grow. A strong brand, positive regulatory relationships, increased revenues, enhanced agility, and a C-suite focused on the firm’s key competitive advantages are just some of the potential benefits.