What is a receivable management service?
Cash flow is the lifeblood of a company, while unpaid invoices and late payments are the bane of small businesses throughout the world. Thats why receivable management services can be so crucial for the proper functioning of your business. Find out everything you need to know about receivable management services with our definitive guide. Receivable management services explained  Accounts receivable refers to your businesss outstanding invoices or money that your business is owed. In many cases, companies do not adhere to your payment terms and dont pay their invoices on time, meaning that your accounting team has to spend time and money chasing them up. Many businesses prefer to simply outsource the accounts receivable collection process. Thats where receivable management services come into the picture. Accounts receivable management services are third parties that handle the entire accounts receivable and debt collection process for your business. Broadly speaking, there are two main types of third-party accounts receivable management services, which are as follows:  Skip-tracing  In some cases, relations between businesses and customers break down, lines of communication go dead, and you wont be able to find the customer to recoup payment. Skip-tracing can help you track down these customers and collect on your unpaid invoice. Third-party management  This is the typical accounts receivable management service, wherein you hire a third-party vendor to run your accounts receivable process and collect on your debts. Sometimes, third-party management is referred to as a debt collection service. Its also important to note that any receivable management service you work with will need to adhere to industry compliance standards, such as ISO 9001 for quality management. Having an efficient accounts receivable management service  or partnering with a third-party who can provide that for you  can have a range of benefits for your business. Most importantly, it makes your unpaid invoices more manageable and improves your chances of getting paid within a reasonable timeframe. Consequently, youll be less susceptible to cash flow issues, which can prove to be catastrophic for businesses of all shapes and sizes. Problems of outsourcing your receivable management services  However, its also important to note that some companies are wary of outsourcing their accounts receivable management services. This is because debt collection services can be belligerent, and if youre outsourcing your debt collection function, theres always a chance that the vendor you work with will harm your brands reputation. Many companies prefer to keep the receivable management process in-house to retain full control of their interactions with clients. Ultimately, whether you choose to outsource to a third party is up to you, but the importance of receivable management services is undeniable. Getting to know Receivable Management Services (RMS)  Now that you have a more general idea of the meaning of accounts receivable management services, lets explore a specific firm: Receivable Management Services, or RMS. The firm is also referred to as North American Receivable Management Services. Put simply, Receivable Management Services, LLC, is a debt collection agency that businesses from a broad range of industries employ to collect on unpaid debts. If you see RMS or North American Receivable Management Services on your credit report, it means that they may have purchased your debt from other companies (as in invoice factoring). We can help  GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.