There are many reasons for a business to consider digging into their credit control process in more depth. From challenging trading conditions, business growth, employee changes or simply the desire to build on an existing business process.
It should not be underestimated how important the credit control function is for all businesses and considering ways to make it more efficient is a challenge.
Why are credit control activities important?
In some circumstances, businesses can have their revenue under control but still have difficult periods due to cash flow. Credit Control is the pillar in which cash flow should be built on.
Optimising the efficiency and visibility of credit control activities is a key factor in making business decisions, so ensuring information is recorded in a structured way is vital. Particularly with the economic environment as it is, due to Brexit and COVID-19.
Whilst there are signs of light in what has been a turbulent 12 months, the challenges faced have not disappeared, so adapting and improving on some of our business processes, and more specifically finance operations, remains a key factor.
It’s certainly not uncommon for an Excel spreadsheet to be used for recording information about collecting customer debt, whether that be an extract of the overdue transactions or in-depth notes about conversations that have been had about collecting the monies due, and whilst Excel is a fantastic tool in its own right, as soon as the information has been recorded, it’s both out of date and unassociated to the transaction and client record to which it relates.
What data can we collect through our Credit Control activities and processes?
Customer profiling or grouping
Grouping accounts by type, average debtor days or simply by credit controller.
Promised payments, values and dates
Customer accepted payment date for activity and cashflow forecasting.
An audit trail of activities of credit chasing.
Future planned activities
A plan for the activities required and time to be planned in.
What does a solid credit control process lead to?
A solid credit control process and system will lead to a couple of benefits:
- Firstly a more consistent cash collection routine, building better cash flow for the business.
- Secondly (and some may say more importantly) business intelligence. This can come in two forms. The ability to profile the customer base moving forward and allowing you to make better decisions about how to move forward with Sales and Revenue with these clients, but also data to produce forecasts that will impact any business decisions.
Analytics should not be underestimated. Google as an example provides all the analytics around marketing and search statistics. A business would consume this data to improve marketing efficiency. Why would you not consider this with credit control in mind?