Costs of Outsourcing Credit Control and also Debt Collection

[WestCountryDesign]

Good Afternoon Everyone,

I was wondering if you could perhaps offer me some advice. In terms of Credit Control, I was wondering roughly what you would expect to pay. There seems to be A LOT of options in terms of how I can pay someone to do it for me.

I have seen:

Percentage of the total amount (amount of money)
2% of total amount

A fixed fee based on the amount (amount of money)
£250.00 per £10,000 of invoicing

A fixed fee based on the quantity (number of invoices)
£250.00 per 250 of invoices

A variable fee based on the quantity (number of invoices)
£1.00 per client

A variable fee based on the amount of contact (number of invoices)
£1.00 per each contact with client



Debt Collection I have seen on a similar basis, although it seems the majority work on no win, no fee with the payment being a percentage of the final amount (between 10% and 20%). I was just wondering what sort of method you would recommend and why you would use that as opposed to others.



Also, at what point would you consider outsourcing your Credit Control? By talking to people I have seen it comes at about the £10,000 a month mark when it works out cheaper than a credit controller.

 

[GRDCredit]

Hi

The reality is that I have customers on all of the basis' that you list, as well as an hourly rate!

My preference is for the hourly rate - my clients prefer an agreed fixed fee per month and I am happy to quote on either basis or indeed any of the ones you list!

In terms of when is the right time to outsource again no firm answer. I have one client who raises just 6 invoices per month - total value c£1000 - and another whose turnover is £70m per annum! It is when it is right for your business

Drop me a PM with your telephone number and I would be happy to give you a call for a no obligation chat.

(not sure where you are based but juding by your profile name I guess we are within spitting distance - I am just south of Bristol)

 

[Geoff T]

Also, at what point would you consider outsourcing your Credit Control? By talking to people I have seen it comes at about the £10,000 a month mark when it works out cheaper than a credit controller.

I thought I'd answer this particular point (thanks for the heads up on the thread Namesake!)

Actually in my experience the monthly amount invoiced to make it worthwhile to outsource is a lot lower...

A client I was working for this morning sent me invoices worth no more than £1,500 - and they still see benefit from it (probably why they still use me, and were one of my first clients).


OP - I agree with Namesake, obviously, that the benefit (and the cost) differs for each company, and varies according to complexity of collection, as well as volume of invoices and their amount.

In order to get a real idea - it's worth having a chat with one of the experts on here... GRD's offer of a no obligation chat is worth thinking about...