The problem of Credit Management can be summed up very simply; the need to get money in to help us trade as a company/organisation, and help others trade with us in turn.

As ever, that can be a complex process if you over-rely on paper in the best case, and even harder in the worst case thanks to the persistence of fraud and error. In this case, we’re worried about company fraudsters – third parties who refuse to play ball with you and pay you or supply you in the right and agreed way. There’s also the issue of slow payment, despite all the UK and EU legislation set up to help curb that, and the order of battle here has to be to keep debtor days – the days you are out of pocket – to the minimum.

The problem is that there are lots of touch points in a big company process that can be a problem to keep on top of. What’s needed is a way to get a complete view of the credit process to ensure the order to cash process runs smoothly. Judicious use of DM (document management) is proving to be one of the best ways to let Finance get a handle on all of this complexity.

DM should play a part from when you first engage with a new customer. There’s a lot of necessary due diligence and credit scoring that needs to take place. There’s a lot of consulting with third party specialist checkers like Dun & Bradstreet, for example, and so a lot of transactions and correspondence builds up.

Time was that correspondence got physically put in the new supplier folder, but we can’t afford that anymore, given the need for speed and integration of vital business information with other business information systems, such as ERP. The more extensive, detailed and transparent this process is, the more efficient you will operate.

Works at both ends of the business spectrum

Speed is the key here, as every debtor day you can avoid is a plus in terms of your cash flow and keeping the supply chain moving along. And blockages can impede you with needless admin intervention, missed delivery or payments or invoice chasing that results in double payments which have to be rolled back and taken out of the system.

Digital credit management is sometimes framed as purely for bigger organisations. I haven’t found that to be true in practice. Digital DM-empowered embedded credit management works as well at the high value, low volume end (think big engineering or construction projects) as at the low value, high volume end (consumer goods, say). They’re both ends of the same spectrum, a spectrum marked by the need to keep money and goods flowing at the pace the process demands.

Finally, having a top-end, seamless, digital credit management function is increasingly a differentiator for customers. You are offering yourself as a premier supplier if you can demonstrate you are on top of this, and senior management in particular feels reassured seeing this level of professionalism in a new supplier.

For all these reasons DM-powered credit management is the way to go, as it helps the company internally, as a partner with others and as a supplier to customers – and is a fantastic opportunity for DM players looking for new worlds to conquer.

How can you resist the call to digital credit management?

Howard Frear

The author is Sales and Marketing Director at EASY SOFTWARE UK