From risk to opportunity: the transformation of credit management in a changing economy

Red teams security

Organisations are increasingly faced with growing payment delays and customers requesting deferred payments. The main cause is economic uncertainty. This makes for a challenging time for credit management staff. After all, just checking and paying incoming invoices is no longer enough. For one in five (18%) organisations, the uncertain economic conditions create challenges in improving credit management.

A healthy DSO

In a good approach to credit management, having a healthy DSO is crucial. In the current economic environment, this can be a challenge. This is precisely why organisations need to pay extra attention to this: after all, too high a DSO has a major impact on the organisation. Persistent liquidity problems can eventually even stop growth. For instance, it can lead to an organisation having to postpone investments. But how can you then structurally improve credit management?

Personal approach

First of all, personal communication with customers is important. After all, communication is the key to improving the DSO, among other things. An individualised customer approach optimises the collection process while also keeping the customer relationship good. With this approach, you examine who the customer is, what they need and what the risks are. In doing so, you can use data to personalise communication.

Three in ten finance professionals (28%) value personal contact, but in practice this does not always prove easy. Always make sure that customers can contact you as easily as possible. But also put yourself in their shoes. Know which means of communication customers prefer. This could be calling or e-mailing, but maybe they prefer WhatsApp or appreciate a personal visit.

Automation and optimisation

Second, organisations can make great strides when it comes to automation. Currently, only a quarter of finance professionals (24%) use specialised software for collections and dunning. So a large proportion of organisations still often have to deal with manual, inefficient and time-consuming processes for, for example, credit checks, invoice processing or preparing payment reminders. While they can easily deploy software that streamlines such processes. This does require investment in technology and training. After all, employees need to learn how best to use these tools. This ultimately leads to finance professionals having more space to focus on their core tasks, such as developing strategies to identify financial risks.

In addition, do not forget to develop clear procedures, optimise data management and encourage communication and cooperation between different departments.

A financially healthy organisation

Improving credit management is essential to be and remain a financially sound organisation. Finance professionals will have to be even more committed to ensuring that customers pay on time. It calls on the flexibility, innovativeness and forward-thinking of the finance professional. It requires quick actions, detailed data analysis and an optimal combination of digital tools and human judgement.

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