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Credit management: 3 current issues for credit managers

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The ” cash culture ” is at the heart of the concerns of companies : reduce WCR, increase ROI and, more broadly, sales. However, in France, tens of thousands of companies are penalized in their results and development by late payments and/or non-payments. And the situation has not improved since the health crisis. While credit management is designed to assess risk, then control and optimize payment management, companies are nevertheless faced with a number of business issues that affect the proper management of receivables and commercial relations. But how can you manage everything at once ?

In this article, we take a look at these issues and the solutions available to simplify your company’s payment management.

#1 Longer payment terms, the bane of commercial relations

The main problem lies in the administrative management of customer invoices. In most business sectors, payment times are getting longer. Between 2020 and 2021, the average number of days has risen from 34 to 52*. When the risk of non-payment becomes too great, the credit manager needs to raise the subject of payment management with customers, in order to regularize their situation. However, these sensitive exchanges can cause tensions in trade relations.

Faced with this situation, it becomes necessary to provide support to finance and accounting departments. In the age of digital transformation, task automation is more than necessary for better credit management, enabling optimization of customer receivables (invoicing, reminders, collection, etc.). As a result, trust between departments is enhanced, the risk of non-payment is reduced, invoice payments are received more quickly and debt collection is more efficient. All in all, more peace of mind for the credit manager, and an even better customer experience!

#2 Traceability and reconciliation, the great forgotten ones

The majority of B2B business relationships extend over long periods. In this configuration, several phases follow one another (definition, analysis, design and realization), involving successive customer settlements. Without a global, unified, day-to-day view of due dates and optimal traceability of payments made, receivables management can quickly turn out to be a real headache for credit managers.

In finance and accounting departments, it is essential to track and record entries and exits efficiently. Many companies suffer from time-consuming and perilous customer payment management. Indeed, when the amount cannot be used as an identifier for reconciliation, for example when invoices have identical or erroneous amounts, the manual reconciliation process cannibalizes the resources of the accounting department. In practical terms, this step of checking incoming payments for errors (references, amounts…) can quickly become a source of frustration.

Using an application (ERP, CRM, invoice issuing solution, etc.) equipped with a payment collection solution with automatic reconciliation is a real opportunity to optimize your receivables management. The objective ? Benefit from traceability and a real-time view of payment requests sent, funds received, upcoming recurring payment deadlines and funds still pending. In this way, invoices are processed faster, without errors and with better follow-up.

#3 The difficulty of debt collection

At the end of the day, recovering customer receivables enables you to finance your business and improve your competitiveness in the marketplace. In this sense, digital intervention in the optimization of rapid debt collection is justified. Indeed, the first 3 stages of the Order-to-Cash process (order taking, invoicing, service provision) are mastered by most professionals, whereas customer payment is an uncontrolled process, since it is initiated by the payer.

Controlling this stage is therefore essential. In fact, automatic management of operational debt collection actions will facilitate customer relations linked to payment management, enabling the planning of reminders for payment requests, the creation of automatic alerts to monitor the progress of customer collections, payment failures or any other event occurring on the platform. The ultimate aim is to enable the credit manager to devote more time to financial analysis and the identification of all possible opportunities to help reduce the company’s WCR, and thus optimize cash flow. Ultimately, this additional cash will be used to finance the company’s growth and competitiveness.

Are you ready to tackle these issues ? CentralPay’s end-to-end customer payment management solution is designed to give you a real boost.

*Source: Results of the 2020 Payment Delays Barometer