Verifying a potential customer’s income is an intensive and time-consuming process, especially for small businesses. However, it’s also necessary due diligence in many industries, such as real estate and finance. Income verification is standard when taking out a loan, buying a house or car, or even applying for financial benefits.
If you’re currently spending hours each week reviewing pay stubs and W-2s, consider outsourcing this process. Third-party firms can streamline the process while offering detailed and accurate reports. Not convinced? Here are some of the key benefits of outsourcing income verification for your business.
One of the biggest benefits of outsourcing your income verification process is the amount of time saved. Verifying the information for just one client could take anywhere from a few hours to a full day, depending on the complexity of the situation. In some cases, you may also need to conduct a background check too. With multiple clients in the mix, that quickly adds up to hours of time spent each week.
By outsourcing the income verification process, your team can allocate their limited time more effectively. Instead of calling employers and reviewing government documents, they can engage in tasks that fully utilize their skills and expertise. They can potentially even use the reclaimed time to innovate and enhance your products or services. The amount of time saved by outsourcing can help your business run more smoothly, enabling you to stay competitive.
Budget is a key consideration for many growing businesses. To address this concern, outsourcing non-core business processes can help you cut back on operational costs.
This may initially seem counterintuitive — many organizations handle their income verification in-house in order to save money. However, if your employees are spending most of their day verifying a client’s income, that prevents them from focusing on other important tasks. This ultimately can hinder productivity, which affects your businesses’ bottom line.
Depending on the size of your business, you may even have staff members in-house that specialize in income verification. Outsourcing can provide the same services at a more manageable cost, often a flat fee per report. This more strategic allocation of resources can yield significant savings in the long run.
Outsourcing grants you access to specialized expertise, ensuring accurate and efficient results. It’s important to make sure that the documents provided by applicants are authentic. While it’s rare, it’s possible for applicants to falsify documents and exaggerate their income. When you’re handling verification in house, it’s possible for these cases to slip through the cracks.
Income verification providers have processes in place to ensure that all results are as accurate as possible. They will ensure that all documents are verified and references are checked appropriately. Many third party providers also offer background checks and other supplementary services.
By outsourcing, you can feel confident knowing that you have accurate information about potential customers. This will help you make informed decisions, whether you’re lending money, making a sale, or providing financial assistance to your clients.
Depending on where you’re based and what industry you are in, you may have regulations to follow when it comes to income verification. For example, credit card providers must follow regulations from the Consumer Financial Protection Bureau when verifying applicants’ incomes.
Because these regulations are very complex, remaining compliant can be tricky for small businesses. However, compliance is essential for avoiding fines and potential legal complications. Third-party providers are designed with compliance in mind, so you won’t have to worry about these regulations if you choose to delegate.
When it comes to outsourcing your income verification process, finding the right partner is key. There are many vendors on the market that offer this service, but they aren’t all created equal. Here are some key factors to consider when selecting a provider for your business.
- Experience: Consider how long the provider has been in business and the reputation they’ve built with other customers. When shopping around, look at provider’s websites. Many will list industry leaders they’ve worked with before.
- Methodology: Ensure that they use up-to-date and reliable data sources and prioritize accuracy in their verification processes. Income verification providers should always use the most recent data available from trusted sources.
- Ease of use: The process should be straightforward for both your team and your clients. The provider should offer clear instructions on how to submit documents and what to expect during the process.
- Speed: It’s also important to consider how quickly your provider will be able to deliver results after your request. Some providers advertise instant results, while others take days. That said, it’s also important to make sure that speed doesn’t compromise accuracy.
- Cost: Income verification should be reasonably priced and provide good value for money. Some providers offer pay-as-you-go plans for smaller teams, which charge per verification. Other options include volume-based pricing for larger organizations. Make sure to shop around to find an option that fits your needs and budget. Don’t be afraid to ask for discounts either.
It may be helpful to evaluate multiple providers to determine which one is best for your needs. By considering factors such as the provider’s experience and the methodology they use, you can choose a partner that will help you maintain a reliable and accurate income verification process. This, in turn, can help mitigate risks and make more informed decisions when dealing with financial matters related to your customers or applicants. Regardless of which provider you pick, outsourcing this crucial process comes with huge time- and cost-savings for your business.