Know the Benefits and Options of Outsourcing
If your agency is processing payments, it is likely that you considered deciding to outsource your payment processing operations. Outsourcing may be a viable option for some agencies that need support in operational efficacy. Having a third-party provider handle your remittance can increase your bottom line.
Factors of Outsourcing Processing:
- Payment Volume
- Internal Resources
- Processing Policies
What to Consider:
Maintenance – If you’re currently processing in-house, you are aware of the costs of maintaining a system. Our lockbox customers enjoy eliminating the manpower and costs associated with transports (consumables, maintenance, etc,) and software platforms. Costs like these are absorbed by your provider and eliminate headaches and worry. Situations like “what if our transport goes down?” or “our hardware provider can’t send a tech until tomorrow!” will no longer be an issue. Eliminating the need to maintain a system has been a huge motivation for our client partners to outsource.
Investments – When determining your in-house payment processing you have to factor the cost of equipment and software. Depending on your payment volume, this could easily cost as much as 30K-200K for an investment for a new system. Many of our remittance clients enjoy the benefits of operating their own in-house system. However, for our lockbox client partners, this type of investment surpasses the benefit of maintaining internal resources. Through outsourcing, your organization eliminates any major corporate investments. You won’t need to purchase new hardware and software. Also, office space and staff won’t be relocated or modified. Outsourcing may allow for redirection of corporate funds which can be used for more immediate company expenses.
Resources/Staff – Using a third party or bank to process your payments can reduce or eliminate the need to hire staff that exclusively handles your payment process. Many of our lockbox clientele were able to redirect staff enabling them to focus more on their customers! Outsourcing eliminates the need for your staff to sort, extract, and handle & process payments—saving much-needed time.
Evaluate Your Option in Third Party Providers:
As with any payment processing solution, not all providers and services are alike in quality and options. You will discover that you’ll find a range in types of service-solutions that are available. Ultimately all lockbox service providers perform the same function—processing your payments for deposit—but “features” distinguish one vendor from the other. Your organization will need to assess your primary need and budget.
Exception Handling – Your agency may receive exception types of payments—full size statement-based payments, love letters, or electronic checks, etc. Some third-party agencies will mail these payments back to your organization for processing or charge extremely high rates! ?looking for a viable payment processing partner, ensure you ask about their exception processing capabilities.
Ask these questions of Payment Processing Servicer:
- Do they mail back payments?
- Can they handle your exception payments?
- Is their solution web-based, so we can make decisions on these payments online?
Special Processing Rules: If your organization has any unique processing policies such as “over/short”, “late payment” handling policies or penalty calculations you need to identify an organization that easily adapts your processing policies into their operations. Firms that have lengthy customizable setups can affect your bottom line and roll out.
Visibility: Ensure that your organization still has visibility over your payments. An ideal lockbox service provider acts as an extension of your organization–a partner. Visibility and secure image access will allow for an improved reconciliation process and connectivity between you and your provider.