Remittance Processing Outsourcing: Getting a handle on it…

Apr 14, 2015

In a trend that began in the late 1970s and picked up speed in the 1990s and continues today, U.S. companies have sought less expensive and better ways of doing business by outsourcing all but their most essential core business processes. Remittance processing outsourcing is one of the easiest ways to start.

The thinking then as now is that improved technology and production know-how – gained from economies of scale and scope – lowers costs, making it more efficient to move more and more non-core work to providers of specialized outsourcing services.

Everything from IT to making shoes to computer manufacturing is outsourced by some of the biggest companies such as IBM, Nike, and Apple and it has enabled them and thousands of other companies to remain focused on what they do best.

Billers have long been outsourcing their remittance processing to third party providers because they learned that outsourcing remittances can improve the bottom line by reducing costs, improving quality and freeing up capital which can be used in core business areas.

When to Outsource Your Remittances

For every company, the right time to outsource remittances varies.

If you are experiencing any of these common symptoms – listed below – then it might be time to outsource this key business process:

  1. Declining paper-based remittance volumes – With electronic payments increasing, it’s hard to justify the cost of an in-house operation;
  2. Equipment maintenance — Remittance equipment maintenance snags can cause processing delays;
  3. Capital expenditure – In a tough economy, companies will put off Capex investment for large equipment purchases or costly upgrades for remittance processing hardware and/or software;
  4. Lean management initiatives – Companies may be forced to focus on their core business to increase efficiency and keep costs under control;
  5. Exception item processing – Workflows will be disrupted which increases cost-per-item unless you have an automated and efficient way to handle exception items;
  6. Rising cost of labor and overhead – Even with a reduced staff, is this cost now a drag on profits?
  7. Non-compliance risk/compliance cost – Are you secure in knowing that you are fully-compliant with ever-changing regulations such as HIPAA, PCI, CFPB and SSA16? There are real costs associated with regulatory non-compliance due to fees, penalties and fines.

What to Look for in a Remittance Processing Provider

The selection process for finding a trusted remittance processing provider is vitally important.

A good starting place is your own network. Ask other business owners for a recommendation; or, inquire with your accountant, lawyer, or banker to see if they can recommend a provider offering the services you need. You would also gather intelligence from industry associations, trade shows and conferences as well as from industry trade publications.

After some initial groundwork, you would start engaging internal staff in a business requirement/ business analysis exercise that will ultimately lead to drafting ‘Request For’ (RFIs, RFQs, and RFPs) documents for circulating to potential providers.

Here are some ‘best practice’ questions to ask your provider as you embark on the selection process:

  • How well does each prospective provider fulfill the essential aspects of the documented business requirements?
  • What performance metrics are important for each task you want to outsource?
  • Can the provider deliver quality at the best price?
  • Are the lines of communication open and well-defined?
  • What other key performance metrics are essential for success?
  • Is the technology flexible and scalable to your needs?
  • Can the technology be customized?
  • Does the provider have an efficient service delivery model?
  • Is the provider experienced in change management?
  • Can you achieve true economies-of-scale? How is it measured?

Making it Work
Communicate your expectations and the steps included in the job clearly; never assume that contractors are thinking what you’re thinking. A thorough business requirements analysis should produce a comprehensive framework for the outsourcing partnership.

Even with clearly stated goals and expectations, there will be a learning curve for both sides.

Becoming a successful outsourcer means relinquishing daily operational control of the process and allowing your provider to implement the solution they were hired to do. If the process is micromanaged, the cost benefits are diminished and the relationship might suffer.

A Long List of Outsourcing Benefits
Although there are risks, business process outsourcing (BPO) ultimately offers companies great advantages. Outsourcing allows companies to process receivables without:

  • Adding the expense of full-time employees
  • Maintaining high facility overhead costs
  • Having to stay current with ever-changing industry compliance regulations
  • Continually integrating new systems and programs with legacy equipment
  • Making costly equipment upgrades.

Some intangible benefits:

  • Outsourcing is a proven strategy for improving your bottom line
  • Defining the process can flush out or reduce inefficiency
  • Frees up time, attention and resources that can be dedicated to core competencies
  • Companies can spend more time on growth.

Knowing who can deliver a workable comprehensive remittance processing solution and who can’t is where your BPO will succeed or fail.

If you are going to hire a provider for your remittance processing, find a company with:

  • Strategy-aligned payment optimization
  • Customized, tech-enabled solutions
  • Seamless payment migration
  • Change management expertise
  • Locations optimal to your client base
  • Disaster recovery and business continuity solutions
  • Compliance and risk management expertise.

To learn more about 3 Point Alliance solutions and services, visit:


3 Point Alliance

Founded in 1990, 3 Point Alliance has been a leading provider of end-to-end remittance processing solutions that exceed industry quality standards and reduce processing costs by streamlining payment operations.

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777 Passaic Avenue, Clifton NJ 07012