Payment delays: reality, fatality or opportunity? What if collection software was the solution?
Payment deadlines are a hot topic right now. However, there are optimization solutions for the credit manager, in particular thanks to the advances of the most recent technological platforms for receivables recovery.
What are the impacts of payment delays for companies?
Inter-company credit represents 650 billion euros in France. This is a reality that has been known for a long time, but whose awareness has been particularly reinforced following Covid and more globally since the beginning of the year 2021. This is due to 3 major impacts: companies are looking for cash, they want to limit the risk of non-payment and finally, they are looking for flexible ways to finance this receivable. Of course, solutions already exist such as dunning, credit insurance or factoring, but companies (especially SMEs) are looking for complementary solutions.
How does SaaS collection software solve payment delays?
On average, the Customer item represents 40% of a company’s assets. The stakes are high. Invoices are a standard but complex and constantly changing asset. The first challenge is to be able to process this information in real time, to be able to sort, classify and evaluate invoices, payments and customers. The platforms allow for this real-time monitoring, analysis and, for the first time, precise scoring of buyers.
Is it possible to reduce payment times through internal actions?
Yes, of course, with optimized collection of customer invoices and better management of disputes. The dunning should be done before the due date and not just after the due date or in collection. In addition, upstream risk awareness, with the definition of internal credit limits, is developing strongly. Finally, a new feature is the integration of order management into the “order to cash” cycle. The platforms allow for these preventive actions through adapted collection scenarios and portfolios. The key point is the collaborative aspect of the platform with a clear ergonomics allowing the credit manager and the salesman to work hand in hand for a real piloting of the sales optimizing the payment deadlines.
Does this require comparing accounting and credit information?
Absolutely. The key is to cross-reference outstanding balances, customer payment experiences and credit limits. Newer platforms cross-reference accounting, order entry and credit information in real time. This is a major advantage: every morning, the recovery operator knows exactly what his priorities are for the day. They are adjusted in real time by the team leader, but also in a self-adapting way by the analysis of information via the platform. In concrete terms, the adoption of procedures that are both industrial and customizable via iT platforms makes it possible to reduce the DSO by an average of 4 to 5 days from the first year of use and to automate 80% of collection tasks.
There is more and more talk about scoring, Big Data and financial analysis, what about it?
Here again, the predictive aspect and not only the curative aspect becomes predominant. In addition to external financial analyses, internal scoring is being developed. This requires the platform to master Big Data technologies perfectly.
Thus, the company can determine by itself a more adapted and real time payment experience of its customers and optimize in an intelligent way its actions of collection of the 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 delays.
About the collaborative role, is it a myth or a reality?
This is not a Facebook of the Customer position. Let’s talk about networking. This allows everyone to share customer information with dedicated access and reporting: monitoring of schedules, outstanding amounts, reminders, disputes, etc., filled in by the credit manager and also the salesperson. It also allows to open 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, to have access to your file and be able to update it online. Collaboration then opens up internally and externally, with partners and customers. After the CRM, the VCM, Vendor Credit Management, has arrived. Mobile applications or “customer apps” dedicated in particular to sales people reinforce this asset.