Credit Outsourcing
Michael C. Dennis, MBA, CBF

The new mantra for business involves concentrating on so-called core competencies, and looking to outsource so-called "non-core functions" - including support functions such as credit and collection. Companies are becoming more and more willing to trust outsourcing companies with complex and critical tasks such as credit decision making and risk management despite the fact that outsourcing these critical tasks even five years

The new reality in American business is that there are no "sacred cows" and any department or any task may be considered for outsourcing --- if it can be demonstrated that it can be outsourced safely and handled competently.
Credit professionals need to be concerned and to remain vigilent about the risks of outsourcing. It is no longer a strong argument for credit professionals to suggest that the work they do cannot be easily duplicated by an outside service. The outsourcing companies have become quite adept at deflecting this type of criticism.
So what should credit professionals do?

Become an active participant in the process of evaluating the outsourcing option. By being on the inside, credit managers can often influence the company to outsource some segments of the credit and collection function while retaining others. For example, it is not uncommon for the credit manager to convince senior management that while it may be acceptable to outsource routine collection calls and dunning notices, it would be best if the following functions were kept in-house:

• Establishing credit limits
  
• Releasing orders

While there are no guarantees, this participative approach gives credit professionals the inside track on credit outsourcing.

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