Credit management strategies are a vital aspect of any business. They allow them to manage their cash flow by devising processes and policies which prevent the late or non-payment of invoices. An ineffective strategy can impede a business’ growth. Therefore, it is crucial to ensure the smooth implementation of a credit management strategy.
Before implementing a credit management strategy, you firstly need to prepare by thinking about what you want from the strategy. You should also consider what the collection flow should look like and what data you need to be a successful collector. Once you have examined these elements, you should follow our top five tips:
- Set clear objectives and start with the basics
Divide the strategy into clear objectives and keep those in mind during the implementation process. It is important to start with the basics and stick to those objectives throughout. For example, aiming to receive all payments within 45-days and then determining how you can achieve that.
- Involve the right people
Be sure to involve all stakeholders and the necessary resources from an early stage and ensure that all resources can be allocated and planned to deliver the solutions on time. For the smooth implementation of a credit management strategy, you not only need to involve the credit management team, but also the finance department at large, as well as the IT department. IT is often underestimated but is a very important stakeholder in this process. This is due to the strategy being heavily reliant on the use and implementation of the right tools. The IT department should be included in the plans early on to ensure the best solutions are chosen and deployed.
Additionally, appointing a project manager is one of the key success factors, as they will be able to oversee each stage of the process and make sure the right people are involved at each stage. It is also important to include the end-users to guarantee the right basic functionalities are understood and what they require from the strategy and any solutions being adopted. Working alongside the end-user will also help you overcome any issues quickly.
- Develop best practices
Based on information from the key stakeholders, it is important to develop a series of best practices to follow throughout the process. At this stage, you should avoid any customisation, saving a great deal of time spent on development and testing. In the future, it will allow the system to benefit from upgrades, etc.
Once you have mastered the basics and have gone live, you can consider expanding the functionality. For instance, further down the line, you may want to export to a collection agency. By first adopting a manual approach, you’ll be able to see and understand in detail how the process works and what the requirements are, before automating and exporting the data.
- Cascade processes
For agile implementation, it is important to cascade and follow clear project steps, particularly when adopting new tools and technology. At Onguard, we take a seven-step approach to implementing software, where you can find out more about here.
- Don’t underestimate the processes
Be careful not to underestimate the process of implementing a credit management strategy and dedicate real time to it. You must also dedicate the right people and resources to it to guarantee it is a success. Also, don’t underestimate what you need from the strategy. Companies often forget about things like dispute management, which is a big mistake. In fact, it should be built into the credit management strategy from the beginning.
While these steps are pivotal to the smooth implementation of a credit management strategy, the work isn’t over once the strategy or solution is in place. You must consider aftercare, particularly as technology changes rapidly, and continue to look at how you can improve the strategy. For example, can you make further improvements or collect money even faster? By continually exploring these issues, you can ensure your credit management strategy remains effective and keeps pace with the changes in your business, advances in technology and credit management practices.
Want to implement your own credit management strategy? Request our demo and start your process today!