GCollect: Late payments: how can digital technology empower credit managers and meet their customers’ operational objectives?
Read GCOLLECT ‘s article on ASTON iTF’s credit management white paper.
Managing accounts receivable and dealing with non-payments is becoming an increasingly important priority for SMEs. Digital technology offers credit managers, treasurers and CFOs new ways of playing their role to the full. Objective: optimize cash flow for companies in these difficult times.
Contents :
- Enhance customer relationship management
- The credit manager, a key point of contact
- Renewing dialogue with sales management
- 5 tips to follow in the event of late payment
- No more excuses for non-payment
Optimization of accounts receivableDSO or WCR is not always at the heart of corporate strategy. And yet it is vital to the health of cash flow and the long-term viability of the company. Today, without committing additional resources, we can rely on automated, agile, secure and high-performance digital solutions that enable us to concentrate on a major source of cash: invoices awaiting payment.
Aston iTF’s guide to enhanced credit management clearly demonstrates the importance of digital technology in optimizing corporate cash flow. Aston iTF, a major player in innovation in receivables management, has developed debt collection software for SMEs and mid-sized companies. Its guide includes analyses illustrated by key figures, experience feedback, and numerous testimonials from consultants specialized in the digitalization of receivables, credit managers and factors.
Enhance customer relationship management
For the AFDCC, the French association of credit managers, awareness of the essential role played by credit management within the company comes too late, when the company is hit by the default of a major customer.
The credit manager needs to take center stage again.
“The role of credit manager is becoming more widespread in companies with sales in excess of 200 million euros. But the situation is very different in smaller companies. And yet! It is in SMEs and ETIs, which are by nature more financially vulnerable than very large accounts, that this function is likely to be decisive”, says Eric Latreuille, President of the AFDCC.
The role of credit managers is to generate cash flow and net income from trade receivables, while maintaining customer satisfaction and contributing to business development. Dunning must be managed with finesse and intelligence. Coordination with sales representatives and sales administration is imperative.
It’s not easy for a credit manager in charge of receivables management to find his or her place in the company. For sales management, marketing management and even general management, this position is not considered a key one.
Thanks to digital technology, credit managers now have the tools they need to become central players in the company.
“. We opted for solutions that offer real flexibility in the management of accounts receivable data, and which enable us to adopt a business intelligence approach,” emphasizes Stephen Rae, Head of Internal Operations at Cegid, an accounting and management software publisher.
He explains why Aston iTF’s positioning seemed the most relevant to him:
“We benefited from the agility and startup spirit that gave our project a great deal of flexibility. As for the solution itself, its collaborative dimension matched our ambitions perfectly.
The credit manager, a key point of contact
Restoring the credit manager’s image requires a change of attitude.
“. To give his mission the weight it deserves, it’s vital that he is able to demonstrate his pedagogical skills. His discourse, vision and methods must be intelligible to sales management, marketing management and even general management!
By positioning themselves as vectors of efficiency and performance, rather than censors of commercial relations, credit managers can help their senior management to move from data to action, by making recommendations backed up by facts and figures. Using raw data that can be transformed into dynamic dashboards, they can work alongside management to identify pockets of performance and under-performance, and even detect processes in need of improvement. With the right data correctly staged, senior management will clearly measure what’s at stake.
Analysis of DSO and customer risk performance customer risk also enables him to make the best trade-offs between credit insurance and factoring.
“The stakes are strategic, so the credit manager must have a seat on the Comex, for example, and cash management must be included in the monthly reports used to monitor the company’s performance,” explains Stanislas Grange, Partner at Eight Advisory, a 430-strong financial advisory firm.
Renewing dialogue with sales management
According to Aston iTF, the founding principle of any business strategy should be :
“There’s no point in running, you have to be paid on time!
And yet, in the reality of business life, the interests of sales people and credit managers can sometimes diverge, disrupting this fine mechanism.
Here again, Aston iTF’ s white paper advises us to shift the focus from collections to cash generation and cash culture.
“We were transparent and educational in presenting the solution to our sales staff. Everyone now has access to a customer’s file in their business unit, and we showed them the advantages of having visibility on customer positions to better interact with them. There’s now a collaborative dimension, particularly in the management of disputes, which has saved us 10 days’ DSO,” explains Christophe Reynaud, credit manager at Bufab.
5 tips to follow in the event of late payment
Aston iTF has developed five unbeatable arguments that credit managers can use to involve sales management in accounts receivable management …
Tip 1: Sf the customer doesn’t pay, we don’t pay commissions
It’s a pragmatic approach that’s good for your company’s cash flow. Commissions are only paid when invoices are honored. This argument is the first on the list, because it’s the most powerful. But it should be reserved for critical situations.
Tip 2: If you don’t follow up with your customer, I will.
While sales managers like to hide behind your arbitrations when they have to get back in touch with the customer to obtain a settlement, they don’t appreciate being deprived of the relationship they have with the customer. By raising the possibility of interfering directly between the salesperson and the customer, the latter may become more actively involved.
Tip 3: If the customer does not rectify the situation, I block the order.
This is yet another argument that helps sales people to commit to a credit management approach. A synthesis of the first two arguments, it places the credit manager in a position of firmness which is unlikely to win him the title of “colleague of the year”, but which will make the sales department understand that the company cannot base its business on orders which present a high risk of never being paid.
Tip 4: By reducing payment times, commissions are paid out faster!
Credit managers also play a key role in salespeople’s remuneration. In companies where commissions are paid on a cash basis, a detailed analysis of customer risk and a better definition of payment terms will enable the salesperson to increase his or her remuneration.
Tip no. 5: What if I told you who your good payers are?
Thanks to his 360° vision, real-time scoring and dashboards, the credit manager can bring a fine-tuned vision to sales and help them develop “safe sales”, i.e. selling to good payers rather than spending energy and discount on bad payers.
No more excuses for late payment
In most companies today, accounts receivable represent nearly 40% of company assets. It is estimated that 60% of late payments are due to a dispute over the quality of invoicing. And 25% of invoice delays or disputes are linked to a defect in the product or its delivery.
But when late payment turns into non-payment, the invoice is all too often left in the corner. Or even written off altogether, especially in companies without a credit manager. But here too, there’s an innovative solution that simplifies and accelerates out-of-court debt collection. It’s called GCollect, the only marketplace for unpaid invoices GCollect is the only marketplace for unpaid invoices: free contact with collection professionals, no minimum amount, preservation of customer relations and cost control.
In short, no more excuses for late late payment. With debtcollection software such asAston iTF, and a market place for unpaid invoices such as GCollect, credit managers, treasurers and CFOs now have new ways of optimizing their companies’ cash flow.
ASTON ITF and GCOLLECT technologies enable credit managers to manage uncertainties quickly and pragmatically.
These innovations in the age of democratized technology and data enable us to offer personalized experiences in which the customer and his values are the main concerns.
Click here to read the full content of the enhanced manager credit guide.
