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What is credit management?
Credit management is part of a financial administration and is generally known as the accounts receivable administration department of a company or (semi) government institution. It is an important part of business operations with the aim of limiting and managing credit risks and optimising working capital while being responsible for handling customer data and maintaining or improving customer satisfaction. Credit management software helps the credit manager prioritise and streamline his work. In addition, the software is able to prepare and complete many of the daily tasks that credit managers now do manually. This gives you, as a credit manager, more time to focus on complex tasks and tasks with a high priority. Credit management software covers a wide variety of functions, such as debtor management, reporting, customer segmentation, credit scoring, payment processing and complaint management. Organisations can integrate specialised credit management software throughout the organisation and integrate it into their existing ERP.
Why do customers pay late?
The failure to pay an invoice can be down to a number of reasons. This may range from the invoice being disputed, due to faulty goods being received, or incorrect paperwork being processed. One of the most common reasons for invoices going unpaid is a lack of cash.
What can I do if a customer is late in their payments?
Late payments. They are problematic for small and large organisations alike. It has a direct impact on your DSO and therefore cash flow. To ensure payment, it is necessary to encourage your customers to pay their bills on time. How? Define payment conditions, invoice immediately, reward customers who pay quickly, contact your customer immediately as soon as the payment term has been exceeded and use the right tools so that you have an optimal overview and insight.
Read our blog on what you can do to minimise risk and ensure customer's pay on time
How can I obtain the payment without upsetting my customer?
Contact your customer, make an inventory of his preferred payment method, ask for the reason for not paying on time and make payment agreements if necessary. That way you think along with the customer and meet his needs. A win-win situation that positively influences customer relationships and customer experience.
Read our blog on steps to ensure customer satisfaction while still getting paid
What other options do I have other than court action for collecting a debt?
Unfortunately, none. Debt collection is the only remaining option if previous reminders have been ignored and the customer really fails to pay.
Can I use excel for my credit management needs?
Yes, this is possible. However, when you, as an organisation, are dealing with a large number of debtors and invoices, the credit management process becomes complication and using Excel is very time-consuming. In this case, Excel is not the most efficient solution to guarantee insight and overview and to prevent human mistakes. With specialised credit management software, for example, it is possible to access, reassign and redistribute tasks from colleagues. Thanks to the ability to automate tasks and the ease of use of credit management software, credit managers have more time left. Instead of performing repetitive tasks, they can focus on more value-adding tasks. For example, credit managers can spend more time building up important customer relationships and spending less time on payment processing and sending reminders.
Read our blog on the limitations of excel in credit management
What is credit scoring?
Credit scoring is crucial for performing activities on a daily basis to get the best out of your credit rating. It shows what the payment amount is for your customer and how likely he is to pay on time. Credit scoring is a method for evaluating and determining the creditworthiness of a customer by applying a set of rules to information collected in a database. With the help of a credit score, you as a credit manager can assess and compare customer performance in terms of quality and quantity. The credit score is a better and more meaningful measurement than a score based solely on payment performance or payment terms.
Visit our Risk Management solutions page for more information on credit scoring
What is cash flow forecasting?
Cash flow forecasting, or predicting the cash flow within your organisation, is an important part of the order-to-cash process. The balance or difference between incoming and outgoing cash flows yields the final cash flow. Within Onguard's credit management solution, we offer real-time reports of incoming cash flows. With this tool, your organisation has a good insight into the expected incoming payments.
Visit our Credit Management solutions page for more information on cash flow forecasting
Why segment my customers?
Through the segmentation and profiling of customers, it is possible to gain greater insight into who you are dealing with. This will allow you to make business decisions accordingly. It can also help you determine which customers need more efforts and resources assigned to them. But conversely, by noticing patterns in when and how they pay, it can highlight which customers don’t need to be chased for payment. This saves both time and resources.
Read our blog on the importance of segmenting your customers
What kind of reporting is available?
Within CreditManager, our debtor management solution, a large number of reports are automatically available at the push of a button, also in real time. Whether it concerns dashboards, KPIs, performance overviews, customer data, outstanding invoices, complaints or a graphical representation of the current DSO (Days Sales Outstanding). The credit management software also provides information about the current state of affairs. Consider, for example, the completed actions and the figures that measure the effectiveness of the current credit management policy. In addition, it is also possible to upload additional information, such as data from Dun & Bradstreet, Graydon, risks or even non-financial data. Users of the software can easily zoom in on specific customers or accounts. In addition, organisations can have the standard reports expanded as required with additional filtering options.