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Information from The Credit Department’s Pam Krank
aimed at helping companies
like yours streamline their accounts
receivable management, credit and collections.
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Thursday, July 15, 2010 Are You In The Dark Ages of Credit? Part One
How are you tracking accounts, let alone accountability, with a manual system? The most recent promise or excuse your customers have made regarding payment was probably written on the last aging, and that’s now in the recycling bin. When your people make their next monthly call, there’s really no accountability. The customer can make the same excuse again, the same promise to pay. In a manually tracked system overloaded with hundreds or thousands of customers, you won’t know if customers are sincere or simply blowing the same hot air in your direction. You should know what’s happening day to day with each and every delinquent customer. It’s a bit simplistic to say that automation is the answer. Efficient, effective processes must always come before automation. Your IT department may not want another system in their ERP. Then you have to get the budget approved. Then you have to decide which solution is right for you, not to mention that good automation software might allow you to operate with lower headcount. No one wants to give up people in their department, replaced by computers. Of course, automation doesn’t always equal layoffs. Perhaps it means that your people have more time for actually getting you paid. At the same time, without a strong workflow solution you’re not going to see problems with your receivables until you’re well into the spiral of slowing payments and eventual defaults. Then no one will have a job. Automating your accounts receivables workflow will pay for itself when it can track the status of every single customer risk and open items. It can show you which of your customers are really your best customers and which should have credit exposures limited before it’s too late. It will put control of your cash flow back into the hands of leadership instead of in the hands of your customers. It will prioritize, streamline and speed up the time between invoicing and payments. Ultimately, a strong workflow AR process will lead to improved company valuation for owners and investors. It can also support future financing and maximize internal cash flow. Thanks to new technology options, workflow automation doesn’t require a huge investment in software. In my next post, I’ll explain the benefits of moving your AR department functions to “the cloud.” |
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Trade Receivables Expert
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