From Excel to credit management software: how to make a business case
Dutch companies are among the fastest payers in the world. There was a recent news report that Dutch companies pay invoices within 46 days. Good news! But is this really something to be happy about? In fact, it means that in many cases companies are waiting almost one and a half months for payment of an invoice and their credit managers spend a lot of time getting customers to pay. It is time to take a look at this process, because it is important to every business that invoices are paid faster. Indeed, if payments were made faster the whole economy could benefit too.
it is a good sign that the economy is back at full speed. When companies have more turnover, are making a profit again and are able to pay their accounts faster, But how can a credit management department ensure that customers actually do pay faster? The solution is an efficient order-to-cash process, but not every company has one. Often they use Excel, a tool that really is not built for databases. This can result in lengthy processes and errors being easily made. It is also difficult to get a good overview of available data. Specialised credit management software can help a company to be a bit more efficient, keep the entire process in order and lastly reduce the days sales outstanding.
Convincing the CFO
A good way of introducing credit management software to a company is to set out clearly how the software can help the organisation. CFOs are often more inclined to agree to a project if they can see that it will save time and money. With the following approach any credit manager can make a good business case for credit management software:
- Make an inventory of software options and costs
When introducing credit management software it is first of all crucial to make an inventory of the software options that the company needs. For example, it is important to determine how many employees require the software and what specific functionalities each employee needs. This is the basis for working out a price for the organisation.
- Set out all the advantages clearly
Credit management software ensures that certain processes are automated. This gives the credit management team more time to focus on higher priority tasks or more complex issues. In addition, credit management software ensures that the order-to-cash cycle is improved in various ways.
For instance, the software reduces credit managers’ administrative load and this gives them more time to make contact with customers quickly. Software can also ensure that tasks are shared out better between the credit management team and that each customer receives an approach tailored to them. These processes ensure that the liquidity of the company is increased.
In addition, software can offer valuable insight into your own organisation. By analysing the data available from the software, it is possible to gain rapid and detailed insight into the status of performance. And therefore where there are difficulties.
- Weight up the costs and benefits
Once the costs and the advantages of credit management software have been mapped out it is time to make an inventory of the objectives that the software will contribute to. Common objectives for companies include greater customer satisfaction or cost savings. In addition it is important in advance to make an inventory of when the software will actually deliver real value after implementation. Get advice from the software provider and discuss the turnaround time of the project.
To sum up: making a business case for credit management software is extremely valuable. First of all make a thorough inventory of what software options are needed, consider all the advantages, and weigh up the costs against the value that it will deliver for the organisation. If you take these steps, it will be clear what credit management software can mean to your company and how the order-to-cash process can be set up efficiently. And then we can be really proud of the speed with which customers pay their invoices in future.
MARTIN DE HEUS
“If you are not taking care of your customer, your competitor will”