Poor economic conditions have resulted in department fundings being skimmed to the bone. However, there are a few fundamental and quickly developed tactics that can be deployed to reduce outstanding accounts receivable.
Fremont, CA: In this age of digital technology, some companies continue to use spreadsheets and highlighters to manage their accounts receivable. This leads to disparate, static information that is difficult to keep track of. With the aid of the appropriate technology, managing accounts receivable becomes a much easier task. Credit and Collections Management (CCM) applications are designed to extend the accounts receivable module in the existing accounting system to manage credit and collection activities effectively. CCM is a suite of integrated business applications that extend a company’s accounts receivable and accounting system to facilitate credit management, billing and invoicing, remittance processing, dispute management, and collections processes. While CCM system functionality can vary widely from publisher to publisher, it basically supports six vital functional areas; credit facilitation, billing and invoicing, remittance processing, collections management, dispute resolution, and reporting and analysis.
Poor economic conditions have resulted in department fundings being skimmed to the bone. However, there are a few fundamental and quickly developed tactics that can be deployed to reduce outstanding accounts receivable.
[vendor_logo_first]Create a Plan
Develop a formalized policy and plan that covers rules, regulations, and procedures to manage daily operations, approval workflow, and resources. A credit plan’s goal is to clearly define these elements so that employees can conform to the documented steps and procedures designed to improve all related business processes. Studies have shown that only 20 percent of credit departments have formalized policies. Many companies struggle to formalize plans due to ad-hoc credit management from salespeople, lack of critical financial information, or only due to time constraints and higher priority projects.
Provide Accurate and Timely Information
Accurate and timely information is not only crucial for internal credit collection teams but also customers. Credit professionals need the information to help prioritize activities, to provide information to customers, and back-up critical decisions and conversations. A credit manager who can see the payment history for a customer will be better able to decide whether or not to increase the credit limit for the particular customer. Collection representatives with quick access to late invoices and new payments will be more capable of determining the status of each account in their collections queue.
Define Roles
Clearly define credit and collection responsibilities and roles. This applies to companies with dozens of credit and collections professionals to small companies with only a few financial employees. Define the roles in the credit plan as well as each employee’s job description. Consideration should be given to providing primary and secondary responsibilities to employees.
