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Why use collection software? What role does it play in a company? Debt collection is the process of obtaining payment from the debtor. The debtor then discharges the money debt he has contracted with the creditor.
On average, according to a 2018 study by Agefi, “every year, 56 billion euros of unpaid receivables, or around 2% of GDP, are reversed in the profit and loss accounts of French companies. If payment terms were respected, the cash flow freed up would be 12 billion euros a year. Only around 2 billion euros are recovered each year, and more than one in four insolvency proceedings is caused by problems of non-payment and late payment”.
Progressive use of collection software to meet changing needs
Developments in the situation
Since the early 2000s, financial risks have become a priority for finance departments. Against a backdrop where the economic and financial crisis of 2007 led to the failure of many companies.
Changes in the legislative framework have also prompted credit managers to review their processes. As a result, balance sheet analysis has long been the preferred method, and it is now necessary to use other data. What’s more, since the enactment of the Macron law, financial data has become increasingly scarce.
Collection software now provides new management and decision-making tools. Thanks in particular to the optimization and use of data, collection software enables you to gain a better understanding of your customers and prospects.
Simplicity
Collection software helps you avoid the tedious steps involved in different types of collection: forced/judicial collection, or amicable collection.
Time saving
What’s more, according to PayStream Advisors, collection teams spend 30% of their time creating priority lists of customers to contact, and finding their contact details.
Collection software more relevant than Excel
Manual data entry
Analyzing and evaluating new credit applications is one of the credit analysts’ key daily tasks.
Some credit analysts still manually enter data from credit applications on paper and by e-mail into spreadsheets. Not only is this a time-consuming process, it is also highly prone to errors resulting from voluminous manual data entry.
–> This could be avoided with collection software that will automatically capture and store all data from an online credit application.
Task prioritization
Credit analysts deal with many different types of task in the course of a day, and need to prioritize their work, which can quickly become tedious.
–>Specialized tools in collection software can help by generating analyst worklists based on several factors, including account types, due dates, criticality and risk scores.
Static nature of spreadsheets
For an effective credit review, analysts need to record information gathered from different sources in a spreadsheet, and refer to these spreadsheets to calculate credit ratings and limits.
–>This is a slow and complicated process that could be eliminated by automation tools in collection software.
Lack of standardization
If you like other credit managers to be stuck with spreadsheets all the time, your team can include several credit analysts who use their own spreadsheets to track credit limits and scores for their portfolio of accounts.
–>This could create a major problem in standardizing your credit rating framework and strategy.
Report generation mechanism
You can track and record credit health and performance in Excel using graphs, but this is hard work that requires aggregating data from multiple sources.
–> An out-of-the-box reporting solution, always connected to all your data sources and featuring predefined reports, could eliminate the amount of work required to generate reports.
Improve ROI with collections software
Improving your ROI is now possible thanks to collections software. Aston iTF offers a complete SaaS software solution for the Digital Credit Manager that will enable :
- Improve your DSO and WCR with our dynamic business dashboards
- Anticipate and reduce your customer risk with our scoring of your customers’ payment behaviour
- Simplify your debt collection thanks to robotization
- Track your disputes efficiently and collaborate internally and with your partners and customers
- Automate the management of your credit insurance or factoring
Fast ROI:
- For a company with €100m annual sales, DSO of 74 days, €20m outstanding and 50% overdue invoices.
- Cash impact: €5m of additional cash.
- Impact on results: €0.8m reduction in costs and bad debt provisions, productivity gains for teams.
- Non-quantifiable impacts: Factoring and credit insurance prerequisites and team motivation, improved cost
of financing.
As you can see, today’s debt collection software is indispensable for improving and simplifying the way you work, and improving your cash flow.
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