More About Outsourcing

The mantra for businesses involved concentrating on so-called core competencies and looking to outsource so-called "non-core functions" - including support functions such as credit and collection. Companies continue to entrust to third parties complex and critical tasks including the credit function. Any position might be eliminated and outsourced if a strong case can be made that tasks previously performed in house can be:

• Outsourced safely, and at a reduced cost to the company, and
• Handled competently

Outsourcing companies have become adept at convincing senior management that the credit function is not a "core competency" and should be outsourced to a company the considers risk management, collection and dispute resolution to be its core competencies.  What can credit managers do about this? They should to be an active participant in the process of evaluating the outsourcing option. They may be able to convince senior management that some if not all of the company's core credit functions should be retained in house, including these:

• Establishing credit limits,
• Evaluating new accounts,
• Performing pending order review and approval

While there are no guarantees that this approach will work, the credit manager will certainly be better off working on the inside than being excluded from the evaluation and decision making process.

© 2011.  Michael C. Dennis.  All Rights Reserved.  Michael is the author of "Credit and Collection Handbook."