Why a collection software? What role in a company? The debt collection is the step that the creditor carries out in order to obtain from the debtor the payment of the due debt. The debtor then discharges the debt of money that he has contracted with the creditor.
On average, according to a study conducted in 2018 by Agefi, “each year, 56 billion euros of unpaid receivables, or about 2% of GDP, are reversed in the profit and loss accounts of French companies. If payment deadlines were respected, the cash flow freed up would be €12 billion per year. Only about 2 billion euros are collected each year and more than one out of four insolvency proceedings are caused by late payment problems.
The progressive use of collection software linked to the evolution of needs
The evolution of the situation
Since the early 2000s, financial risks have become a priority for finance departments. In a context where the economic and financial crisis of 2007 caused the failure of many companies.
The evolution of the legislative framework has also led credit managers to revise their processes. Thus, since balance sheet analysis has been the preferred method for a long time, it is necessary to use other data. Moreover, since the promulgation of the Macron law, it has become necessary to deal with a scarcity of financial data.
Today, collection software provides new management and decision support tools. Thanks to the optimization and use of data, the collection software allows to acquire a better knowledge of the customers and prospects.
The collection software allows you to avoid the tedious steps of the different types of existing collection: forced/judicial collection, or amicable collection.
In addition, according to PayStream Advisors, collection teams spend 30% of their time creating priority lists of customers to contact and finding their contact information.
Collection software, more relevant than Excel
Manual data entry
The analysis and evaluation of new credit applications is one of the key daily tasks of the credit analyst.
Some credit analysts still manually enter data from credit applications on paper and via email into spreadsheets. Not only is this process time consuming, but it is also very prone to errors resulting from extensive manual data entry.
–> This could be avoided by collection software that will automatically capture and store all data from an online credit application.
Prioritization of tasks
Credit analysts deal with many different types of tasks in 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 should record information gathered from various sources in a spreadsheet and refer to these sheets to calculate credit scores 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 may have 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 scoring framework and strategy.
Report generation mechanism
You can track and record credit health and performance in Excel using charts, but it’s a difficult job that requires aggregating data from multiple sources.
–> An out-of-the-box reporting solution that is always connected to all your data sources and has predefined reports could eliminate the amount of work required to generate reports.
Improve your ROI with a collection software
Improving your ROI is now possible thanks to collection software. Aston iTF offers a complete SaaS software solution for the Digital Credit Manager that will allow to:
- Improve your DSO and WCR with our dynamic business dashboards
- Anticipate and reduce your customer risk with our scoring of your customers’ payment behavior
- Simplify your debt collection with robotization
- Track your disputes efficiently and collaborate internally and with your partners and customers
- Automate the management of your credit insurance or factoring
- For a company with €100m annual turnover, 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 provisions for bad debts, productivity gains for teams.
- Non-quantifiable impacts: Factoring and credit insurance prerequisites and team motivation, cost improvement
You have understood it, the debt collection software is essential today in order to improve and simplify its working mode and to improve its cash flow.
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