By Mark Brousseau
Expect another strong year for remittance outsourcing in 2007. That’s according to FTP Consulting Services President Steve McNair, who sees growing interest in outsourcing from medium to large-volume remittance processors. Top reasons? The lack of differentiation among in-house remittance systems, the changing cost structures as a result of declining check volumes, and the pressure at more companies to outsource non-core functions.
“Reductions in check volumes, and the move to electronic payments, are hurting some in-house remittance operations by driving up the unit costs to process paper items,” McNair stated. “And with declining paper volumes, it is difficult to build a business case to replace an outdated remittance system. Outsourcing offers a more attractive business model.”
What’s more, the transition toward check image exchange and accounts receivable check (ARC) conversion is driving down the processing costs of most outsourcers, providing them with economies of scale that are rarely available to in-house remittance operations.
“The big winners will be the outsourcing providers that partner with banks to offer a bundled remittance offering that is attractive compared to in-house processing,” predicted McNair. “The billers also win in that they will reduce, or at least stabilize, their remittance costs.”
Long-term, McNair believes that the prospects for remittance outsourcing are good. “With mounting corporate pressure to reduce operations costs, medium to large-volume remittance processors will continue to find it difficult to justify maintaining in-house systems,” he said, adding that sales of in-house remittance systems in these segments likely will decline.
Mark Brousseau is the facilitator of TAWPI’s Payments Capture & Clearing Council and Forms Processing Leadership Council. He also is president of Brousseau & Associates, a strategic marketing and PR firm specializing in the payments and document automation arenas. Brousseau can be reached at 717-767-2574 or via m_brousseau@msn.com.
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Expect another strong year for remittance outsourcing in 2007. That’s according to FTP Consulting Services President Steve McNair, who sees growing interest in outsourcing from medium to large-volume remittance processors. Top reasons? The lack of differentiation among in-house remittance systems, the changing cost structures as a result of declining check volumes, and the pressure at more companies to outsource non-core functions.
“Reductions in check volumes, and the move to electronic payments, are hurting some in-house remittance operations by driving up the unit costs to process paper items,” McNair stated. “And with declining paper volumes, it is difficult to build a business case to replace an outdated remittance system. Outsourcing offers a more attractive business model.”
What’s more, the transition toward check image exchange and accounts receivable check (ARC) conversion is driving down the processing costs of most outsourcers, providing them with economies of scale that are rarely available to in-house remittance operations.
“The big winners will be the outsourcing providers that partner with banks to offer a bundled remittance offering that is attractive compared to in-house processing,” predicted McNair. “The billers also win in that they will reduce, or at least stabilize, their remittance costs.”
Long-term, McNair believes that the prospects for remittance outsourcing are good. “With mounting corporate pressure to reduce operations costs, medium to large-volume remittance processors will continue to find it difficult to justify maintaining in-house systems,” he said, adding that sales of in-house remittance systems in these segments likely will decline.
Mark Brousseau is the facilitator of TAWPI’s Payments Capture & Clearing Council and Forms Processing Leadership Council. He also is president of Brousseau & Associates, a strategic marketing and PR firm specializing in the payments and document automation arenas. Brousseau can be reached at 717-767-2574 or via m_brousseau@msn.com.
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