By Bob Shultz
Partner, Quote to Cash Solutions (Q2C) LLC
Many companies consider outsourcing all or part of the order to cash process to be a cost effective alternative to retaining internal staff and infrastructure improvements. This is not a decision to be taken lightly. It requires a thorough evaluation of choices.
I like to look at the entire process from beginning to the end. Start with the development of a price-and-terms quote. Understand how the decision will impact all the steps leading to good funds sitting in your company’s bank account. All the steps in between are interconnected. In short, you have to consider the quote to cash process in total. Ensure all the stakeholders are working in concert to provide your company with efficient support and your customers with excellent service.
Any decision to outsource should consider the impact on all elements of the quote to cash process. The project leader must take into account how the decision affects the other stakeholders involved. Senior management, sales, customer service, operations, project management, etc., all either feed into the affected processes or are impacted by the performance results. To ensure success, involve these other stakeholders from the beginning. Their perspective and involvement is critical. Remember customer service considerations should take a priority seat.
There are numerous factors you need to consider when deciding if outsourcing or improvement of internal operations through automation is best for your company. You will notice many of the decision factors go beyond just the potential money savings.
When done for the right reasons and in the right way, outsourcing can, in fact, help your company grow and save money. Just make sure the decision is deliberate and well thought out.
Below are seven advantages to outsourcing order to cash functions:
- Focus On Core Activities
In periods of rapid growth or, as with many companies in recent years, a reduction in business activity, back-office operations must expand or contract as the business changes. If the back office does not keep pace with the business activity, it can consume resources (human and financial) at the expense of the core activities that have made your company successful. Outsourcing functions like order entry, credit control, collections, dispute management and cash administration can provide opportunity. Remaining internal resources can be refocused onto priority business activities without sacrificing quality or service in the back office.
- Cost And Efficiency Savings
Back-office functions may be complex and require a level of sophistication in both human and system resources. As your company grows and internal operations expand, management may be faced with a choice: make sizable investments to keep up with the growth, or find a third party capable of taking the hand-off. Without the needed improvements, the company may not be able to perform at an acceptable level of accuracy or speed at a consistent and reasonable cost.
- Potential to Reduce Overhead
Overhead costs can easily run higher than expected. If functions can be moved to an alternative location or partnered with an automation provider, there will be a significant cost savings realized on total overhead.
- Operational Control
Operations that have costs are running out of control are prime candidates for outsourcing. There is often a lack of compliance control, fuzzy objectives and performance tracking in accounts receivable departments at many organizations, and these are situations where an outsource provider may bring more up-to-date and effective skills than are currently available within the struggling company’s staffing budget.
- Staffing Flexibility
Outsourcing order to cash functions will allow operations that have seasonal, cyclical or special project demands to bring in additional resources when needed. Excess staff can be released when the need diminishes.
- Continuity & Risk Management
Periods of high employee turnover can add uncertainty and inconsistency to any operation. Outsourcing may provide the continuity needed to reduce the risk of substandard performance.
- Dedication of Internal Staff to “High Priority,” Core Functions
Critical strategic customers need to be adequately supported. Outsourcing low priority functions and, at the same time, lowering cost will enable highly skilled internal staffers to focus on critical priorities and major accounts.
In Part 2 of this series, we will examine preparing for an outsource engagement and the challenges outsourcing order to cash functions can present. You will learn which factors to consider in weighing an internal vs. an outsourced solution.
For more information about Bob Shultz’s Q2C consulting service, visit his website at www.QuotetoCash.com. To learn more about DataServ’s automated Q2C solution, click here or send a message to info@DataServ.com.