What's better in house credit control or outsourced credit control

I’m often asked what is the best type of credit control, is it better to increase the size of a companies credit control department, or would it be best to outsource the task to a third party.

For me the best will always be to keep credit control in-house and working with a third party for those cases that slip over. I hope the following helps you make your mind up.

Years ago companies no matter how large or small they were always had at least 1 dedicated credit controller and even then they would often need additional help. Now days in the age of 1 man bands, the owner has to also chase overdue accounts. So the first thing that has be decided is can you appoint a person to handle your credit control. If you can then much will depend on how many accounts that person will be chasing, what else will they be doing? If you take the 70 – 30 rule as a guide in other words out of 100 account clients, 30 will be late & generally of these 8-10 will still be overdue at the end of the following month.

If this is your scenario and you can’t afford to bring in another credit controller you may wish to outsource the overdue accounts to an independent agency.

How does this work, is usually the next question I’m asked. Like everything else with debt collection and credit control setting out the collection parameters is vital, during this period you will need to decide if the agency is to be your credit control department or acting on behalf of the agency. Either way you should be able to dictate that your client pays you directly. You will also need to agree a reporting system is it real time or daily, weekly or monthly. The agency will need to know how they will receive the information, will you be providing copies of invoices or supplying the details in an excel spreadsheet or via a CRM or SAP system. Cost will depend on how the agency wants to be paid some will agree on a flat fee others on a % of the total ledger and some will work for a % of monies collected. The choice will need to be decided as there is no standard fee structure.

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