Can technology supersede outdated credit management workflows?

October 01, 2018

The Old World…

Credit management is key for the health of any business. Recent reports from major businesses in difficulty show that the lack of appreciation and focus on turning sales invoices into cash was a key contributor to their downfall.

In recent years successful businesses have also seen the importance of good cash flow and asked themselves how much cash is available by turning debtors into cash rather than looking for alternative sources of funding or fighting for new sales.

However, while the focus may have changed in many of these successful organisations, the technology they use to implement their new strategy often has not. Many organisations are restricted because of their current system that determines the process, or because the lack of a system forcing departments to rely on the hard work of committed staff who make it work despite the technology (or lack of it).

At one of our recent credit events, a question was asked on what Credit Professionals used to manage debtors. The clear winner was Excel, or several Excel workbooks, combined with the ‘dunning’ process of the ERP system. The restrictions of these ‘technologies’ was well discussed in the following debate! The common goal proved to be maximising segmentation but that started a second discussion on how difficult it is to manage so many items of data on customers from different sources in real time.

One of the challenges of workflow in many systems is that you need to go through one gate to get to the next. In other words, these systems are ‘dumb’ as they do not treat debtors differently, which often leads to unfair treatment of customers. In an age where treating customers fairly and with a customised approach is a necessity, these technologies are simply not providing the credit control department the best means to maximise cash optimisation in a way that also maintains customer relations.

The New World…

Innovation comes from doing something different.

The new generation of credit collection technology doesn’t simply tweak or add-on to an existing process that plugs in old data, but rather creates a new way of working, that embraces the modern approaches to credit management and allows intelligence to be created from multiple sources of data in real time.

With these new innovative tools, Credit Managers can effectively develop and implement modern strategies with multiple benefits to the collections process:

  • Dunning is brought up to date using flexible Customer Strategies. These allow the timing of dunning activity to be dynamic and no longer the tedious workflow process of before.
  • Data from multiple sources, such as Credit Reference Agency, Credit Insurance, DBT, etc. can be viewed and analysed in real time. This allows a holistic view of a customer in one place, not spread across numerous spreadsheets. This frees valuable time spent by someone collating all the data to then distribute, by which point the data is out of date!
  • Intelligence discovered from payment trends and the predictability of when customers pay using artificial intelligence. This is making a tremendous impact on department results.

The famous American engineer, professor and management consultant W. Edwards Deming once said that if you put a good person in a bad process the process will always win. While your team can do their best with outdated and inflexible systems, the change that can come from giving them the right tools, data intelligence and flexibility is revolutionary, allowing them to effectively implement modern collections strategies.

Brian will be talking about how new machine learning and AI based credit collections technologies are transforming credit teams and sharing his own experiences along with other leading industry experts at our series of credit management workshops around the UK this October.