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Payment delays: reality, fatality or opportunity? What if collections software were the solution?
Payment terms are a hotly debated topic right now. However, there are ways for credit managers to optimize their operations, thanks in particular to the latest technological platforms for receivables recovery.
What impact do payment deadlines have on companies?
Inter-company credit represents 650 billion euros in France. This is a reality that has been known for a long time, but awareness of it has been particularly heightened since Covid and, more generally, since the start of 2021. This is due to 3 major impacts: companies are looking for cash, they want to limit the risk of non-payment and, lastly, they are looking for flexible ways to finance this customer item. Of course, solutions such as dunning, credit insurance and factoring already exist, but companies (especially SMEs) are looking for complementary solutions.
How does SaaS collection software solve the problem of late payment?
Customer accounts represent on average 40% of a company’s assets. The stakes are high. Invoices represent a standard asset, but one that is complex and constantly changing. The 1st challenge is to be able to process this information in real time, to be able to sort, classify and evaluate invoices, payments and customers. Platforms enable real-time tracking, analysis and, for the first time, precise scoring of buyers.
Is it possible to reduce payment times through in-house actions?
Yes, of course, with optimized collection of customer invoices and better management of disputes. Dunning must be carried out before the due date and not simply after the due date or during collection. In addition, upstream risk awareness, with the definition of internal credit limits, is developing rapidly. Last but not least, order management is now integrated into the ” order to cash ” cycle. The platforms enable these preventive actions to be taken by means of adapted collection scenarios and reminder portfolios. The key point is the collaborative aspect of the platform, with clear ergonomics enabling the credit manager and the sales representative to work hand in hand for real sales management, optimizing payment times.
Does this mean comparing accounting and credit information?
Exactly. The key lies in cross-referencing outstandings, customer payment experience and credit limits. The latest platforms cross-reference accounting, order entry and credit information in real time. This is a major advantage: every morning, the dunning operator knows exactly what his priorities are for the day. These are adjusted in real time by the team leader, but also in a self-adapting way through the analysis of information via the platform. In concrete terms, the adoption of industrialized, customizable procedures via iT platforms reduces DSO by an average of 4 to 5 days from the 1st year of use, and automates 80% of collection tasks.
We’re hearing more and more about scoring, Big Data and financial analysis, what’s the latest?
Here, too, the predictive rather than merely curative aspect is becoming predominant. In addition to external financial analyses, internal scoring is also developing rapidly. This requires the platform to be fully conversant with Big Data technologies.
In this way, the company can determine for itself a more tailored, real-time payment experience for its customers, and intelligently optimize its actions to collect unpaid invoices. And this is no longer based solely on the analysis of dated balance sheets. Assessing the risk of customer default is still the best way to reduce payment times.
Is the collaborative role a myth or a reality?
This isn’t a Facebook post about the customer. Let’s talk about networking. It enables everyone to share customer information, with dedicated access and reporting: monitoring of agendas, outstandings, reminders, disputes, etc., filled in by the credit manager as well as the salesperson. This also opens up access to customers or partners, who can now respond via a dedicated access to the platform, indicating the reason for the dispute, the expected payment date, the name of the right contact… In short, they can access their file and update it online. This opens up collaboration both internally and externally, with partners and customers. After CRM comes VCM, Vendor Credit Management. Mobile applications or “Customer Apps” dedicated in particular to sales staff reinforce this advantage.
