Improving your Bottom line: Is Credit Control Automation the answer?


Do you want to improve your bottom line? Is Credit Control Automation the answer? What are the benefits of Credit Control Automation? Why is it important for a business to have good credit control procedures? What are the pitfalls faced by companies who have poor credit control? Does credit control have danger zones that you can fall into, and what are the benefits of automating your credit control system?

Questions? Questions? Questions? Read on to find some answers!

The Importance of Credit Control Procedures

Every business needs good credit control procedures. If you don't have any credit control it usually follows that you have poor cash-flow. If you have poor cash-flow your business can fail. Millions of $'s are lost by companies all over the country due to poor credit control systems.

One of the major downfalls in any credit control system can be the human intervention factor. Human intervention poses risks. People make mistakes, people become sick, people take a vacation, people find other positions with other companies. All these things combined can adversely affect your credit control system. If different people handle this function when they are not used to the system their effectiveness becomes diminished.

What are the Pitfalls of poor Credit Control?

Companies cannot survive unless they have cash-flow. Bad debtors can cause enormous cash-flow problems for organizations be they large or small. Often this bad debtor situation is caused by trading terms not being vigorously enforced.

When you get a new customer it is usual practice to take credit references and mark them in your accounting system. Over a period of time as the customer trades more and spends more over time a trading history and trust is built up and that is when trading terms are often relaxed and a certain amount of leniency starts to creep in. This is the first danger zone! 

Other Danger Zones for Credit Control

The other danger zones in your credit control system are often out of your control but some are driven by internal factors at your company. Here are just a few that you should be aware of:

  • Personnel changes or absences at your customer.

  • Salespeople in your organization pressing for better trading terms for their customer.

  • Absence of personnel who can authorize payments.

  • The Economy and its fluctuations. 

I am sure you can think of many others too! Feel free to post them in the comments at the end of this blog!

Benefits of Automated Credit Control

Now that we have gone through the importance, pitfalls and some of the danger zones in credit control management let us consider the benefits of Automated Credit Control.

By automating the manual systems you can accurately and in a timely fashion chase debts and notify relevant people about important and impending due dates. You do not have to take a chance that your debtors won't be chased as your credit control manager has taken a days vacation!

There is proof that automatic credit control can significantly improve credit control systems and cash flow and at the same time tighten control on credit limits and overdue invoices.

The question is What do you want to Automate?