GCollect: Late payments: how can digital technology empower credit managers and meet their customers’ operational objectives?
Read GCOLLECT ‘s article on ASTON iTF’s credit management white paper.
Managing accounts receivable and handling unpaid bills is becoming an increasingly important priority for SMEs. Digital technology offers credit managers, treasurers and CFOs new ways of playing their role to the full. Objective: optimize cash flow for companies in these difficult times.
Contents :
- Enhance customer relationship management
- The credit manager, a key point of contact
- Renewing dialogue with sales management
- 5 tips to follow in the event of late payment
- No more excuses for non-payment
Optimizing trade receivables, DSO or WCR is not always at the heart of corporate strategy. Yet the health of their cash flow and the long-term future of their business depend on it. Today, without committing additional resources, we can rely on automated, agile, secure and high-performance digital solutions that enable us to concentrate on a major source of cash: invoices awaiting payment.
The augmented credit manager’s guide published by Aston iTF clearly sets out the digital challenge for optimizing corporate cash flow. Aston iTF, a major player in innovation in receivables management, has developed debt collection software for SMEs and ETIs. Its guide includes analyses illustrated by key figures, experience feedback, and numerous testimonials from consultants specializing in the digitization of receivables, credit managers and factors.
Enhance customer relationship management
For the AFDCC, the French association of credit managers, awareness of the essential role played by credit management within the company comes too late, when the company is hit by the default of a major customer.
The credit manager needs to take center stage again.
“The role of credit manager is becoming more widespread in companies with sales in excess of 200 million euros. But the situation is very different in smaller companies. And yet! It is in SMEs and ETIs, which are by nature more financially vulnerable than very large accounts, that this function is likely to be decisive”, says Eric Latreuille, President of the AFDCC.
The role of credit managers is to generate cash flow and net income from trade receivables, while maintaining customer satisfaction and contributing to business development. It’s important to manage your relaunches with finesse and intelligence. Coordination with sales and administration is imperative.
It’s not easy for a credit manager in charge of receivables management to find his or her place in the company. For sales management, marketing management and even general management, this is not considered a key position.
Thanks to digital technology, credit managers now have the tools they need to become key players in the company.
“The credit manager must constantly juggle between an objective analysis of accounting data and the many ‘human’ variables that influence customer risk analysis and, ultimately, the company’s overall commercial strategy,” explains Aymeric Dupas, Managing Director of Aston iTF.
“In the past, we used traditional dunning tools, but these were not adapted to our needs. We opted for solutions that offer real flexibility in the management of accounts receivable data, and which enable us to adopt a business intelligence approach,” stresses Stephen Rae, Head of Internal Operations at Cegid, an accounting and management software publisher.
He explains why Aston iTF’s positioning seemed the most relevant to him:
“We benefited from the agility and startup spirit that gave our project a great deal of flexibility. As for the solution itself, its collaborative dimension matched our ambitions perfectly.
The credit manager, a key point of contact
Restoring the credit manager’s image requires a change of attitude.
“We need to stop talking about collections or late payments, and instead talk about digital transformation and automation,” insists Aston iTF.
However, it’s not always easy for a credit manager to make people understand the choices he makes and the very nature of his role. To restore its mission to its rightful place, it is vital that it be able to demonstrate its pedagogical skills. His message, vision and methods must be intelligible to sales management, marketing management and even general management!
By positioning themselves as vectors of efficiency and performance, rather than censors of the commercial relationship, credit managers can help their senior management move from data to action, by making recommendations backed up by facts and figures. Using raw data that can be transformed into dynamic dashboards, they can work alongside management to identify pockets of performance and under-performance, and even detect processes in need of improvement. With the right data in the right place, senior management will have a clear idea of what’s at stake.
Analysis of DSO performance and customer risk also enables him to make the best trade-offs between credit insurance and factoring.
“The stakes are strategic, so the credit manager must have a seat on the Comex, for example, and cash management must be included in the monthly reports used to monitor the company’s performance,” explains Stanislas Grange, Partner at Eight Advisory, a 430-strong financial advisory firm.
Renewing dialogue with sales management
According to Aston iTF, the founding principle of any business strategy should be :
“There’s no point in running, you have to be paid on time!
And yet, in the reality of business life, the interests of sales people and credit managers can sometimes diverge, disrupting this fine mechanism.
Here again, Aston iTF’s white paper advises us to shift the focus from collections to cash generation and cash culture.
“We were transparent and educational in presenting the solution to our sales staff. Everyone now has access to a customer’s file in their business unit, and we’ve shown them the benefits of having visibility of their customers’ positions, so they can interact with them more effectively. There’s now a collaborative dimension, particularly in the management of disputes, which has saved us 10 days’ DSO,” explains Christophe Reynaud, credit manager at Bufab.
5 tips to follow in the event of late payment
Aston iTF has developed five unbeatable arguments that credit managers can use to involve sales management in accounts receivable management …
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Tip 1:
S
f the customer doesn’t pay, we don’t pay commissions
Striking at the wallet is not a low blow, it’s a pragmatic and salutary step for the company’s cash flow. Commissions are only paid when invoices are honored. This argument is the first on the list, because it’s the most powerful. But it should be reserved for critical situations.
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Tip 2:
If you don’t follow up with your customer, I will.
While sales managers like to hide behind your arbitrations when they have to go back to the customer to obtain a settlement, they don’t appreciate being deprived of the relationship they have with the customer. By evoking the possibility of interfering directly between the salesperson and the customer, the latter may become more actively involved.
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Tip 3:
If the customer doesn’t rectify the situation, I block the order.
Here’s another argument that helps sales reps commit to a credit management approach. A synthesis of the first two arguments, it places the credit manager in a position of firmness that is unlikely to win him the title of “colleague of the year”, but which will make the sales department understand that the company cannot base its business on orders that carry a high risk of never being paid.
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Tip 4:
By reducing payment times, commissions are paid out faster!
The credit manager is also a key player in sales compensation. In companies where commissions are paid on a cash basis, a detailed analysis of customer risk and a better definition of payment terms will enable sales reps to increase their remuneration.
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Tip no. 5: What if I told you who your good payers are?
Thanks to his 360° vision, real-time scoring and dashboards, the credit manager can bring a fine-tuned vision to sales and help them develop “safe sales”, i.e. selling to good payers rather than spending energy and discount on bad payers.
No more excuses for late payment
In most companies today, trade receivables represent close to 40% of company assets. It is estimated that 60% of late payments are due to billing quality issues. And that 25% of invoice delays or disputes are linked to a defect in the product or its delivery.
But when late payment turns into non-payment, the invoice is all too often left in the corner. This is particularly true of companies that do not have a credit manager. However, here too there is an innovative solution that simplifies and accelerates out-of-court debt collection. This is GCollect, the only marketplace for unpaid invoices GCollect is the only marketplace for unpaid invoices: free contact with collection professionals, no minimum amount, preservation of customer relations and cost control.
In short, no more excuses for late
late payment
. With debt collection software such asAston iTF, and a marketplace for unpaid invo ices such as GCollect, credit managers, treasurers and CFOs now have new ways of optimizing their companies’ cash flow.
ASTON ITF and GCOLLECT technologies enable credit managers to manage uncertainties quickly and pragmatically.
These innovations in the age of democratized technology and data enable us to offer personalized experiences in which the customer and his values are the main concerns.
Click here to read the contents of the enhanced manager credit guide.