Providing credit managers with a new sense of visibility


Providing credit managers with a new sense of visibility

The relationship a business has with customers extends well beyond the point of sale. At each stage of the client lifecycle – from initial contact to after-sales care and billing – the way a company interacts with its customer is fundamental to building a valuable, long-lasting relationship. Good customer care is not a new concept but businesses often focus on the pre-sales activity. How do we target our sales and marketing? How can we get the product to customers easier and quicker? Businesses pride themselves on listening to customer needs. However, the real test of a customer relationship comes when handling a customer with a negative credit balance. This is a tricky situation – get it wrong and it could lead to poor customer experience or worse, the customer cutting its ties.

Changing the mentality

YouGov states that nearly half of small and medium-sized business face late payments at least once a month. Subsequently, the chasing of outstanding balances is critical for the health of a business. However, late payments are often handled by departments where tenacity and persistence are valued over customer relationships. With pressure from senior management to ‘get paid as quickly as possible’, credit controllers naturally don’t prioritize keeping customers happy.

While this mindset may have worked in the past, modern credit controllers must ensure the process remains positive. This involves understanding more about customers.  Some credit managers can get to know their customers during the initial full examination of their needs and requirements. This allows for more personalised communication in future and enables the inividual segmentation of customers. They are assessed by who they are, what they need and what the risks are.

Personalisation is the key to getting paid

As credit managers are aware, the reasons for non-payment differ greatly between customers; there is never a ‘one size fits all’ approach.  Some may be experiencing temporary difficulties. For example, an understaffed accounts department with a high workload might mistakenly overlook an open invoice. While some always pay late as a matter of policy, and others are genuinely facing cash-flow problems. Because of these differences in circumstances, all these will act favourably to a personalised approach.

Personalisation needs insights beyond excel spreadsheet’s capabilities

For many small and medium-sized business, credit managers have most likely relied on excel spreadsheets containing customers’ financial and billing information. While often thought of as the holy book of the credit department, the spreadsheet’s function is limited to number crunching. Not for storing masses of details about customers; their contact details, sales records, payment history, and outstanding balances. It lacks the valuable customer insight we mention above, and as businesses grow, it becomes an increasingly frustrating and timely tool to deal with.

Credit management technology to automate and personalise

The evolution of credit management technology means there are now specialist solutions that help boost a company’s financial security, consolidate cash-flow, save time and help build better relationships with customers. This technology optimises the Days Sales Outstanding (DSO) process and makes the entire Order to Cash process insightful for both the credit department and the customer.

The fact is that credit management, as a process, can be automated for the most part. Credit management solutions can monitor each customer’s order to cash journey and use this data to segment customers – assessing who the customer is, what they need, what the risks are, their payment behaviour and how they prefer to communicate.

“The credit manager needs more than an Excel spreadsheet with financial and invoicing data to build a good, personal customer relationship.”

Once segmented, credit teams can assign automated reminders, processes, and actions based on this behaviour. Consequently, communication with a customer who always pays late will differ from customers who simply forgot to pay an invoice.  This functionality provides customers with the attention they need, while also giving credit managers more time to focus on exceptions.

CreditManager for better customer relationships

As credit management software provides insights in the entire order-to-cash process, all stages of the journey can be optimised and KPIs achieved. This may include lowering the DSO, optimising cash flow, improving the ability to focus on the core business and focusing on a positive customer experience. It also gives a fully integrated overview of the cash flow forecasting and outstanding debts.

Credit management software implementation is growing in popularity in businesses thanks to the benefits it offers. The technology’s ability to automate day-to-day processes while also delivering key insight to maintain personalisation is critical to the future of the organisation – creating a positive experience and the lowest possible DSO. Having the right solution in place affords breathing room to credit management teams so that they may focus on the customers’ needs and requirements, therefore helping to build better relationships with their customers and lay the foundations for the organisations future growth.

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