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 so often businesses 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 relationship comes when handling a customer with a negative credit balance. This is a tricky situation – get it wrong and it could lead to a poor customer experience and even the customer cutting its ties.
With nearly half of small and medium-sized business facing late payments at least once one month as stated in YouGov research, the chasing of outstanding balances is critical for the health of a business. However, the reality is that is a sensitive entity that is often handled by departments where tenacity and persistence are valued of customer relations. With pressure from senior management to ‘just get paid as quickly as possible’, some credit controllers don’t see their jobs as involving keeping the customer happy.
While this mindset may have worked in the past, modern credit controllers must ensure the process remains positive and this involves understanding more about the customers. Some credit managers can get to know the customer better because of the full examination of the customers’ needs and requirements during the initial contact, allowing for personalised communication. This enables customers to be segmented individually, by assessing who the customer is, 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 the spreadsheet’s capabilities
For many small and medium-sized business, credit management has most likely relied on a spreadsheet containing customers’ financial and billing information. While often thought of like the bible of 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 that valuable customer insight we have talked about above and, as businesses grow, it can become 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 customer relationship with a personal approach.”
MARTIN DE HEUS
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 those with the customer who simply forgot to pay an invoice. This functionality provides customers with the attention they need, while at the same time, giving credit managers more time to focus on exceptions.
As credit management software provides insights on 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.