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Often, the first time a company seriously considers outsourcing any of its credit services is when the senior credit manager announces to his or her staff, "We've got a problem; we can't keep up with the work. And it's costing us big time." In the past, this was a call to arms, which meant longer work hours, higher stress levels and possibly a shakeup in the organization. Perhaps, a special "consultant" would be brought in to reengineer or suggest alternative processing procedures.
Today there is another choice: An outsourcing arrangement.With increased emphasis on efficiency and strong performance of all core activities, many companies are rethinking whether all or much of their credit activities have to be handled by full-time staff. It is no longer considered necessary to be able to do everything in-house. In fact, many firms have realized that the outsourcers can do a better job because they focus entirely on receivables and credit management and have developed effective technology and data bases that enable them to bring more resources and experience to a situation than most companies can.
There are a good variety of options when it comes to outsourcing receivables and credit services. Companies can choose an outsourcer that can handle the full receivable/credit process for a portion or all of the company's customers. This means that the outsourcing service can become part of the company's overall business strategy, not just a temporary expedient. Of course, it is not necessary to outsource all activities on a permanent basis. Outsourcers can also provide a quick fix if needed, but this may not be the most effective use of the outsourcer's capabilities, in the long run.
To understand what is possible and available, we investigated the various types of outsourcing, visiting or interviewing the following full-service outsourcing firms:
* Creditek
* Dun & Bradstreet
* C/LECT
* OSI
* The Credit Department
We will use these firms as illustrations of what is possible in receivables and credit outsourcing today. They should be regarded as good examples, but they are not the only outsourcers available. In addition, readers may wish to revisit a previous article, The Strategic Foundations of Receivable Outsourcing, by Tom Corbett, in the May 1999 issue of Business Credit.
What is Outsourcing?