Outsourced accounts receivable helps when invoices go out late, payments sit unmatched in the bank and nobody has time to send reminders. An offshore team can take on the routine work so your customers are billed on time and your aging report shows what is really owed.
Key takeaways
- An offshore AR team can raise invoices, apply payments, send reminders and keep the aging report accurate.
- Decisions about credit terms, disputes and write-offs should stay with you.
- Applying cash daily or weekly makes the aging report reliable.
- A simple reminder schedule, agreed in advance, improves collections without upsetting customers.
- A short weekly AR summary keeps you informed without extra meetings.
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What is outsourced accounts receivable?
It is the handling of money your customers owe you by an outside team. That covers creating and sending invoices, recording payments against the right invoices, chasing overdue amounts and reporting on what is outstanding. The team works in your accounting or billing system and uses your templates and terms.
What the team usually handles
- Invoices raised from your billing schedule, contracts or delivery records, using your invoice templates.
- Customer records kept up to date with billing contacts and terms.
- Payments matched to invoices as they arrive, including partial and combined payments.
- Reminder emails sent on an agreed schedule, for example a few days before the due date and then at set intervals after it.
- Credit notes prepared when you approve them.
- A weekly aging report and a short note on accounts that need your attention.
What should stay with you
Keep decisions that affect customer relationships on your side: credit limits, payment plans, disputes, discounts and write-offs. The offshore team can prepare the information and draft replies, and you decide. If a customer wants to talk on the phone, the team can flag it to you.
Ask us to review your current aging report
Making it work
Start with a clean aging report. The first weeks often involve matching old unapplied payments and closing invoices that were paid long ago. Agree a reminder schedule and the wording of each email, and decide who customers should contact with questions.
AR works best alongside regular reconciliations, as described in our post on monthly bank reconciliation. For the full picture of outsourcing finance tasks, see our practical guide to offshore accounting. Our receivables service covers the details.
A sample reminder schedule
Agree the schedule and the wording of each message before the team starts sending them. A common pattern for invoices on 30-day terms looks like this:
- A friendly note a few days before the due date, with the invoice attached.
- A reminder a few days after the due date, asking the customer to confirm when payment will be made.
- A firmer reminder around two weeks overdue, copying your accounts contact if you have one.
- A note to you once an invoice reaches about a month overdue, so you can decide whether to call the customer, pause work or agree a payment plan.
Adjust the timing for your industry and your customers. Long-standing customers who always pay a few days late may need a lighter touch than new ones.
Reading the aging report
The aging report groups unpaid invoices by how long they have been outstanding. Look first at the oldest group and at any customer whose balance has moved into a later group this month. Unapplied payments and credit notes also show up here and should be matched to invoices or refunded. A clean aging report is the best single sign that receivables are under control.
Frequently asked questions
Can an offshore team chase late payments for me?
Yes. They can send reminder emails on an agreed schedule using your wording and email address or a shared AR inbox. Disputes and payment plans are usually passed back to you.
How often should payments be applied to invoices?
Daily or at least weekly. The longer payments sit unmatched, the less reliable your aging report becomes and the harder it is to see who actually owes you money.
Will customers know I use an outsourced AR team?
They will see emails from your AR inbox and your invoice templates. Whether you mention the arrangement is up to you.
What is cash application?
It is matching each payment you receive to the invoice or invoices it pays. Without it, customers look as if they owe money they have already paid, and the aging report can't be trusted.
Get paid faster with Oakridge Global
Our accountants handle invoicing, cash application and reminders for businesses in the US and around the world. Schedule a consultation with Oakridge Global to talk about your receivables.