There are many different reasons why, with each passing year, an increasing number of businesses seek to outsource their payment processes. Not only can this potentially help your business save money on a per-unit basis, but you may also be able to improve your bottom-line even more due to the fact that you will have considerably more time to focus on whatever it is that your business does best.
The payment outsourcing industry is one that is revolutionizing and growing quite rapidly. Consequently, many different outsourced payment processing specialists have emerged for you to choose from. As you navigate the market and begin comparing your different payment outsourcing options, there are obviously many different essential details that you will need to keep in mind.
If your business has decided that you do, in fact, want to begin outsourcing your payments, the company you choose to partner with will certainly be a decision that you want to get right the very first time around. By choosing the best payment management team for your business, you will be able to productively move forward with one less than to worry about.
In this article, we will discuss some of the most common mistakes that businesses make when outsourcing their various payment processes. By avoiding these mistakes and learning a little more about the industry as a whole, you will find yourself in a position to make an objectively good decision.
- Failing to Recognize the Services You Need
In a nation with more than one million independent businesses, there is no denying that there a many different ways of doing business. Each business is one that will have a very personal dynamic and, as a result, will also have a unique set of outsourcing needs.
Before you begin comparing different companies, there will be a few fundamentally important things for you to keep in mind. While some companies will only want to outsource their payment statements, others will have a need to outsource their invoices, other important statements (medical, financial, etc.), and even marketing materials. Once you have been able to recognize which specific services you need—and, just as importantly, which services you don’t need—the search for the perfect fit should be a little bit easier.
- Miscalculating Volume
Price should not be the only thing you consider when comparing different firms, however, there is no denying that this is something that will be fundamentally important for businesses of all sizes. In order for your business to determine which price you will pay on a per-unit basis, it will be critical to come up with a rough estimate of your monthly payment and/or statement volume. This is due to the fact that many outsourcing firms price their services using a non-linear scale.
Generally speaking, it may be a good idea to come up with a best, worst, and expected set of scenarios. By generating a reasonable and data-supported range of what your monthly payment volume might be, you can test these three figures and see if it would actually make a difference of which company makes the most sense for you.
- Hiring an Inexperienced Firm
Again, though your business will certainly be trying to save money (that is likely why you are outsourcing payments, after all), it will still be important to take other things into account as well. If you jump the gun and hire an inexperienced firm, this may create a wide variety of different issues for your business as you move down the road.
Fortunately, there are many different ways that you can gauge the level of experience of any of the firms that you are currently considering using. Naturally, the first place you should begin is the company website—this will allow you to get a brief overview of their background and also familiarize yourself with the services that they are offering.
Furthermore, reading reviews from previous customers will also help you get a more objective understanding of what your experience with the firm may actually be like. If you are in an industry that has special rules governing the handling of sensitive information—specifically financial and medical industries—it will further be critical to assure that each company is entirely compliant.
- Forgetting About the Importance of Opportunity Costs
If your business currently manages its payment and statement processes in-house, then this likely means that there is someone who must dedicate a portion of their time to focus on these tedious tasks that could be used doing something else. In other words, though you may be saving by not hiring an outside firm, there is certainly an opportunity cost associated with keeping these tasks in house.
When calculating the material expenses involved in the payment outsourcing process, it will undeniably be in your best interest to do so from an opportunity cost perspective. For example, suppose that hiring a firm will cost you (on average) $100 per hour. If the person who would otherwise be handling these processes could otherwise be earning your company $200 per hour, then that means selecting that particular firm will have a net impact on your bottom line of $100 per hour (maybe even more, due to increased efficiency). Obviously, these figures can really begin to add up over time.
- Hiring a Middle Man
The many different reasons that your firm may want to outsource ought to be abundantly apparent. However, it is important to be careful when comparing different companies because, for better or for worse, the benefits of outsourcing are truly universal.
Some companies (a small portion of the industry) will “accept” the responsibility for outsourcing these payment and statement processes only to then outsource these processes to someone else themselves—often overseas. In this particular situation, the company you would have chosen would not actually be adding any value to your business and instead will merely be operating as a middle man.
It is important for you to choose a payment outsourcing partner that is apparent, up front, and honest about the entire process. By making an effort to communicate directly with each prospective company in advance, you will be able to find someone you can trust who—at the very least—will help you be more confident in the process as a whole.
There is no doubt that outsourcing your payment processes might be an objectively smart decision. However, when navigating the industry, there are several common mistakes that you will want to avoid. By keeping these mistakes in mind, finding the firm that is right for your business should be considerably easier.