Managing vs Outsourcing Your Sales Ledger

Sales ledger management is a business function which many small companies find difficult. The project management skills required to perform credit control functions adequately do not necessarily form part of the competencies required for entrepreneurs to start a business. For this reason, many start up companies choose to outsource their sales ledger, with the most common technique being a foray into the world of invoice finance.

Managing Your Own Sales Ledger

Of course, it is entirely possible for those running a small business to learn how to manage their own sales ledger. It simply requires attention to detail, and a comprehensive tracking system for all of the invoices you send out. This can be achieved through one of the readily available software packages designed for business finance, or even through a simple spreadsheet. If you are looking to manage your own sales ledger, however, you will need to ensure that one member of staff has total oversight over the process. The easiest way to go wrong when tracking invoices is to split the responsibility over a number of different employees, none of whom believe that they have complete responsibility for the issue. This will lead to invoices being lost ‘between the cracks’, as each employee believes that the other is dealing with a particularly difficult customer.

If you are looking to manage your own sales ledger, you will also need to ensure that whomever is chasing up recalcitrant customers is properly trained in how to approach the situation. Whilst some customers who haven’t paid will need to be dealt with quite firmly in order to secure the required payment, others may well have good reasons for not having paid. It is vital always to remember that repeat custom is what makes a business sustainable, and where possible you should be looking to find a solution which suits both your business and the customer. This requires careful thought, and an element of specialised expertise.

Outsourcing Your Sales Ledger

Lack of such expertise is what often drives small businesses to consider outsourcing their sales ledger, either to an accountancy company or as part and parcel of an invoice financing arrangement. In either situation, the added expertise gained through your credit control being handled by specialists can significantly boost your cashflow, as well as reducing the amount of bad debt from which your business suffers. However, it is vital that if you enter into such an arrangement, you carefully read the small print of the contract and satisfy yourself that the approach being taken towards your customers fits with the ethos of your company. Under no circumstances should you enter into an outsourcing arrangement in which the only criteria is the percentage of invoices paid. Credit control is much more complex than this, and performing it in an insensitive or rushed manner can have very serious implications for the future growth and reputation of your business. Outsourcing can work, but make sure you know exactly what you want from it, before you start!

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.


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