Dialogue and interconnections, the strengths of credit management - By Guillaume Ponsard, CentralPay
What role for credit management?
Le 18 November 2020
It is a little-known profession and few companies have opened a credit management position backed by their finance and accounting department.
During cash management, the credit manager’s mission is to make the payments successful. Its role, essential to optimizing cash flow and working capital, is now supported by automated recovery technologies and predefined and tailor-made scenarios. In synergy with the panoply of payment methods available today, they promote dialogue and commercial relations for a variety of customer profiles and sometimes complex payment processes.
Customer accounts receivable, deadlines and unpaid bills in BtoB as in BtoC
The annual report of the Observatory on payment terms for fiscal year 2018 is not particularly flattering for large companies, which persist in paying their suppliers, for 56% of them, beyond 60 days. Sectors where the clientele is essentially made up of professionals suffer the longest delays. The annual survey conducted by the credit insurer Atradius among more than 2,700 companies in 13 European countries shows a significant deterioration in customer lead times in France.
But if the report focuses on late payments between professionals, debt collection from private customers also has significant room for improvement. In 2018, unpaid bills between individuals and professionals represented € 284 billion.
Whether they operate in BtoB or BtoC, the most weakened by these late payments are, unsurprisingly, very small businesses and SMEs. They are “38.6% to consider that late payments had significant negative consequences on their activity, and 21.3% say they have taken measures to recover cash when 14.7% had to call on their banker to obtain an extension of their overdraft lines ”.
Preserve the commercial relationship to the end
Cash culture in business is still underdeveloped, and knowing how to optimize its cash flow is to ensure the sustainability and growth of the activity. Among the levers of this culture, the introduction of a credit manager position aims to arm the company against the risk of default and to significantly reduce the DSO (Days sales outstanding). The role of a client workstation manager is complex. It must analyze and prevent the risk according to the customer, it defines the general conditions of sale, designs, implements and evaluates the invoicing process and proceeds to the recovery of debts.
Between the issuance of an invoice and the possible recovery process, therefore, the sensitive stage of payment takes place, in accordance with contractually fixed deadlines and in compliance with regulatory texts. While the payment is in part conditional on the credit manager’s analysis and contractual drafting work, it is ultimately based on customer satisfaction.
Customer satisfaction is built throughout a relationship, which does not end with the sending of an invoice. It is nourished by continuous dialogue and communication, with multiple objectives: for the company, it is a question of preventing and identifying possible discontents, which could lead to litigation. For the credit manager, this is an opportunity to quickly remove obstacles to payment, by offering various facilities solutions. For the client, it is listening and showing the company’s interest in its difficulties.
Article originally published on October 13, 2020 and to be read in full on docaufutur.com