SMEs urged to outsource accounts to save costs

SMEs in the West Midlands need to outsource their accounts payable function before the payable amounts become debts, credit advisers have said.

Carole Hughes, managing director at credit management and debt collection firm Daniels Silverman, which has a base in Birmingham, said such a move would improve cashflow and give firms greater peace of mind.

“We have noticed an upsurge in enquiries from SMEs who would like to collect monies owed before they actually become debts – typically between 30 to 60 days after payment was due,” she said.

“This seems to be related to SMEs choosing to focus on  growing their core business and outsourcing their back-end collection functions such as making sure that payments are coming in on time.”

She said many SMEs were left in the situation where they had to increase their FTE staff numbers to deal with delays in payments from customers, whereas if they outsourced this would enable them to reduce their wage bill and still ensure customers were being contacted regularly to prompt payment.

It would also reduce concerns about providing cover for staff holidays, sickness, and other employee statutory leave entitlements, she added.

“These days, more than ever, cashflow is king, and SMEs are striving to ensure that they are not losing out to late or non-payers. With the government recently indicating that they will implement the new EU late payment directive 12 months ahead of the deadline, so that the UK will be operating under the new rules from March 2012, it is a good time for companies to take stock of their invoicing and payment-chasing policies,” said Ms Hughes.