The Benefits of Service Outsourcing - Research Paper Example

? Business of Essentially most of the companies that provide services rely on the s natural promptness to pay forthe services either after a fortnight or on a monthly basis depending on the policies guiding service contracts. The electrical and contracting company offers both electricity and contracting services to clients. The purpose of this study is to identify the most probable way of collecting funds without necessary affecting the customer relations (Sirota, James & Tantor media, 2008). This study intends to consider the extent of advantages attributed to outsourcing of services of account receivables and the necessity of maintain good customer relations. This study reveals that company’s biggest challenge is to collect the funds from its numerous clients. It is imperative to note that, some of the impediments promoting this situation include lack of strong internal controls guiding financial matters. For instance, the company lacks internal controls guiding billing and collection efforts (Sirota, James & Tantor media, 2008). The departments intended to ensure that, due diligence in collection efforts has been exercised seem to be inexistent. It is significant to note that, due diligence is satisfied when the client’s statements or invoices are mailed monthly or at the agreed payment period. The clients should be billed shortly before the end of the current service delivery period, such that the client can make prior arrangements for payment. In addition, exceptional reminders or collection mails for the past due accounts should be sent to clients. However, provisions should provide that discontinuing of services for delinquent clients be implemented after certain duration. This study reveals that, the company has lost a lot of money through non-payment by clients due to poor collection methods attributed to the limited number of employees. An apt internal control for collection of debts and monitoring accounts receivable is fundamental in any firm because it helps solve current business problems and helps prevent fraud from occurring. More over, it creates confidence on the public and other investors and strong controls. These aspects ensure transparency, accountability and enhance a vivid flow of funds collected from the clients (Sirota, 2008). This situation leads to the investigation of the advantages attributed to the outsourcing services. Essentially, outsourcing refers to the act of contracting out a business process or function, which the organization may have performed internally and due to inefficiency or expansion of a business, it opts to subcontract it to an external company. It s noteworthy that, outsourcing is a common feature of modern economy (Sirota, 2008). The outsourcing deal may include transfer of employees and assets involved in the outsourcing partner. The company in this context will find numerous advantages in outsourcing its account receivable process alongside keeping good relations with its clientele. It is essential to note that, the outsourcing partner will embark on tracking of clients who do not pay the service dues. The advantages attributed to the outsourcing company include Facilitating more focus on core activities In a rapid growth periods, the back office operations of a company are likely to expand. This development may begin to guzzle both human and financial resources at the cost of the core deeds of the company’s success (Sirota, 2008). Outsourcing these operations will permit refocusing on the core actions of the business without sacrificing quality or service in the back office. This may include company marketing, opening of new branches employee motivation and empowerment. Reduced overhead Essentially, overhead costs of performing back office functions are extremely high. For instance, the expense incurred in collecting debts from numerous clients is considerably high, and it might affect the smooth running of the firm (Newell, 2010). Outsourcing enables a firm to perform the outsourced function in at consistent and reasonable cost. Similarly, outsourcing reduces the cost of office space especially in the case of small companies, which need to save on renting and the leasing office space. Operational control The companies’ activities that are running out of control should be considered for outsourcing. It is noteworthy that, such operations require apt systems to be put in place to rectify the situation. For the case of the company in context, things have gone out of hand since the company is loosing scores of cash due to poor collection methods and client account monitoring (Karl, 2006). This is a practical example of a company function that has run out of hand and it requires commitment, systems and time to normalize. This can be effectively done by an outsourcing partner, which can bring additional management skills that otherwise would have not been realized in the company. Staffing flexibility It is noticeable that, outsourcing will allow operations, which have cyclic or seasonal demands or trends to bring in additional resources when they are needed, and they can be released when, not in use (Bargley, 2012). For instance, an accounting department that is short hand, during the collection of debts. Outsourcing this role can provide the supplementary resources for a preset period at a constant cost. Continuity and risk management Periods of lofty worker turnover will add improbability and inconsistency to operations. Outsourcing will present a level of permanence to the company while dropping the risk of a unsatisfactory level of function would bring to the company (Johnson, 2003). Develop internal staff A large project needs to be undertaken that require skills that the staff do not exhibit. Outsourcing of the project will bring people wit skills required to execute the operation in a most efficient manner (Johnson, 2003). In addition, supplementary skills will be transferable the company’s workforce who will work alongside the outsourcing company. Observation This study reveals study the company requires outsourcing to carry out the function of collecting the debts. It is evident that, the company does not have proper internal controls guiding the accounts receivable and debt collection (Johnson, 2003). This operation seems to have run out of hand consequently it requires designation and implementation of apt systems that can facilitate the collection of all the outstanding debts without affecting the customer loyalty link so far created. It is notable that, customer satisfaction goes beyond service delivery and keeping the clients. The outsourcing company can be used as a marketing instrument besides its core operation of collecting debts (Johnson, 2003). Incorporation of outsourcing in the marketing strategy will enhance more customer connection with the parent company. However, this is only possible on the level of the outsourcing company selected. It is imperative to note that, an outsourcing company should have apt experience in implementing innovative solutions that can solely solve problems and causing customer delight. This study establishes that, outsourcing for a small company is critical in maintaining and enhancing customer relationship. This is possible through information sharing. Information sharing implies the exchange data that directly or circuitously influences the aftermaths between suppliers and customers. Information input is one of the principal aspects of a successful supply chains. Information pertaining account debts and payables, all billing transactions and complaint resolutions should be disseminated to the client in time to enhance proper budgeting. This approach by any outsourcing company contributes immensely to strong ties between the tree parties. It is notable that, communication among the outsourcing company, the main firm and the clientele is fundamental in facilitating a close link with the services offered by the parent firm. Essentially, information is required to aid in logistics management (Customer relationship management, 2001). The outsourcing companies should embrace apt Information systems since they play an integral role in information sharing and facilitating effective and efficient interactions. This study recommends that, the company should embrace outsourcing of collection of debts since the operation has run out of time (Sirota, James & Tantor media, 2008). It requires development of apt systems that can enhance efficient debt collection without any effect on the loyalty link between the company and the clients. In addition, the outsourcing company should structure its mechanism well such that it incorporates marketing chains and systems to enhance strengthening of ties between clients and the company. In conclusion, small companies should embrace outsourcing due to tremendous changes in the technology, business structure, strategic planning and customer demands. Conversely, deep research is fundamental in numerous areas of business operations (Sirota, James & Tantor media, 2008). For instance, investigation on the exact percentage of small businesses that practice or embrace outsourcing. It is imperative that outsourcing contributes immensely to strengthening of customer loyalty links with the main company and above all outsourcing is attributed to reducing of workload, overhead expenditure, having control over operation, regulating staffing, enhances continuity and risk management. References Johnson, S. R. (January 01, 2003). Nonprofit health insurers: the story Wall Street doesn't tell. Inquiry : a Jo Bagley, C. O. N. S. T. A. N. C. E. E. (2012). Managers and the legal environment: Strategies for the 21st century. s.l.: Cengage learning custom p. urnal of Medical Care Organization, Provision and Financing, 40, 4, 318-22. Customer relationship management. (2001). Manhasset, NY: CMP Media. Fornell, C. (2007). The satisfied customer: Winners and losers in the battle for buyer preference. New York: Palgrave Macmillan. Karl, K., & Peluchette, J. (January 01, 2006). How Does Workplace Fun Impact Employee Perceptions of Customer Service Quality?. Journal of Leadership & Organizational Studies, 13, 2, 2-13. Newell, Frederick. (2010). Why CRM Doesn't Work: How to Win by Letting Customers Manange the Relationship. John Wiley & Sons. Sirota, D. (2008). The uprising: An unauthorized tour of the populist revolt scaring Wall Street and Washington. New York: Crown Publishers. Sirota, D., James, L., & Tantor Media. (2008). The uprising: An unauthorized tour of the populist revolt scaring Wall Street and Washington. Old Saybrook, Conn.: Tantor Media Read More