“Time is money”: all late payments are lost earnings. According toANCR, in 2017, 56 billion euros of receivables remained unpaid in France, representing around 2% of GDP. The problem of late customer payments is now applicable to all companies. How can I reduce my overdue payments? This is the number 1 challenge facing credit managers today. The cash culture is at the heart of the discussions, and the objectives defined by the managers converge: reduce WCR, increase ROI effectively and rapidly improve sales.
In the age of digital transformation, it’s finally possible to meet these challenges. The average supplier payment period is 51 days, whereas officially it should be 30 days. However, France seems to be on the right track. According toAltares figures, in 2018, 33% of companies paid their invoices on time. Today, the figure is 43.4%, i.e. almost one in two.
The subject of late payment is of particular concern to SMEs, and many articles have been devoted to it, such as this one from a chartered accountant. com or this one from Figaro or this one from Service Public
Why are we always faced with late payments?
The main problem is related to a non-compliant invoice: error in amount, address, telephone number, etc. Disputes are not to be taken lightly. Processing times are often too long, and some of these invoices are never paid at all. The figures are significant, and 1 in 3 companies today goes bankrupt because of late payment.
Why is it important to reduce late payments?
A company cannot grow its business and be competitive if its working capital requirements are too high. It is therefore essential to be able to recover customer outstandings to finance your own business and improve your competitiveness in the market.
How do you deal with late customer payments?
Firstly, the Loi de Modernisation de l’Economie (LME), introduced in 2008 and revised in 2015, has reduced late payments by 1 day a year. Penalties can reach up to 2 million euros. Following the example of the UK, the practice of “Name and Shame” is beginning to emerge in France, enabling companies with poor payment habits to be publicly denounced.
Robotization and new technologies to avoid late payment are the order of the day. Credit managers have a role to play. To increase efficiency, it is essential to digitize your tools so that information is updated automatically. Specialized customer visibility platforms such as ASTON AI are solutions not to be overlooked. The benefits are clear: the intelligent automation of customer follow-ups frees you from 80% of manual tasks, without distorting the established commercial relationship. The customer/supplier listens more attentively and pays his dues in a more reasonable timeframe.
In conclusion, these solutions have enabled a 20% increase in cash collection. Not only are they more efficient, they also save time so that you can focus on more strategic issues and generate more revenue.
Read more :
A collection software solution? 5 reasons and 5 questions
Why digitize the Order To Cash process?
Credit Management: how to simplify the transition to a cash culture?
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