Customer management : The 3 current issues for credit managers
Customer management : The 3 current issues for credit managers
Le 7 February 2022
The “cash culture” is at the heart of the concerns of companies: reduce working capital, increase ROI and more broadly the turnover. However, in France, tens of thousands of companies are penalized in their results and their development by late payments and/or unpaid bills. And the situation has not improved since the health crisis. While credit management should enable companies to assess the risk, then control and optimize payment management, they are still faced with certain business problems that affect the customer management and commercial relations. But how to manage everything at once?
In this article, let’s take a look at these issues and the solutions that can simplify payment management in companies.
#1 Longer payment terms, the bane of commercial relations
The main problem lies in the administrative management of customer invoices. In most sectors of activity, payment terms are getting longer. Between 2020 and 2021, the average number of days has increased from 34 to 52*. When the risk of non-payment becomes too great, it is necessary for the credit manager to discuss the subject of payment management with customers in order to regularize their situation. However, these sensitive exchanges can cause tensions in commercial relations.
Faced with this situation, it becomes necessary to support the financial and accounting departments. At a time of digital transformation, the automation of tasks is more than necessary for a better management of credit management, allowing the optimization of the customer management (invoicing, reminders, collection…). In this way, we observe an improvement in trust between departments, a reduction in the risk of non-payment, faster payment of invoices and more efficient debt collection. In short, more peace of mind for the credit manager and a better customer experience!
#2 Traceability and reconciliation, the great forgotten ones
A majority of B2B business relationships extend over long periods. In this configuration, several phases follow one another (definition, analysis, design and implementation), and involve successive customer payments. Without a global, unified and daily view of the payment schedules and an optimal traceability of the payments made, the customer management can quickly turn out to be a real headache for the credit managers.
In finance and accounting departments, tracking and historizing incoming and outgoing payments efficiently is a necessity. Many companies suffer from a perilous and time-consuming management of customer payments. When the amount cannot be used as an identifier for reconciliation, such as when invoices have identical or incorrect amounts, the manual reconciliation process consumes the resources of the accounting department. In concrete terms, this step of verifying errors in incoming payments (references, amounts, etc.) can quickly become a source of frustration.
Using an application (ERP, CRM, invoice issuing solution, etc.) equipped with a payment collection solution with automatic reconciliation is a real opportunity to optimize the customer management. The objective? To benefit from traceability and a real-time view of payment requests sent, funds received, upcoming recurring payment deadlines and funds still pending. This way, invoices are processed faster, without errors and with better follow-up.
#3 The difficulty of debt collection
In the end, recovering customers’ outstanding debts allows to finance the company’s activity and to improve its competitiveness on the market. In this sense, the intervention of digital technology in the optimization of debt collection is justified. Indeed, the first 3 steps of the Order-to-Cash process (order taking, invoicing, service provision) are mastered by most professionals, but the customer payment is an uncontrolled process, since it is at the payer’s initiative.
Controlling this step is therefore essential. Indeed, the automatic management of operational collection actions will facilitate customer relations related to payment management, allow the planning of reminders for payment requests, the creation of automatic alerts to monitor the progress of customer collections, payment failures or any other event occurring on the platform. The ultimate goal is to allow the credit manager to spend more time on financial analysis and to identify all possible opportunities to help reduce the company’s WCR, and thus optimize cash flow. Ultimately, this additional cash will be used to finance the company’s growth and competitiveness.
Ready to tackle these issues? CentralPay’s solution is designed to take control of your end-to-end customer payment management, giving you a major boost.
