Credit management and the payments process of a business occupies a difficult position within any organisation. A key component of working successfully, the payments team can often feel slightly detached from the rest of the business – a ‘necessary evil’ that everyone from the sales team to the board of directors needs to deal with in order to keep the wheels of their organisation turning and the cash continuing to flow.
Credit management – everybody’s business
It’s a clichéd term, but putting together a successful business is very much like a car’s engine. If the individual pieces don’t work together in harmony, then nothing can function properly. Think of it this way – sales win contracts, manufacturing makes the product, quality control ensures everything is delivered to the highest standard and then credit management collects the cash for a job well done; certainly a simplified way of looking at processes, but one that illustrates this point. Harmony is vital for a business to run properly, but looking at credit management specifically, it’s worth delving into the effects this mindset can have in more detail. Because without the cash, you might as well be putting diesel into a petrol engine.
Efficiency – A problem shared is a problem halved. Or quartered for that matter. Having a team working on payments rather than a few individuals means you can tackle issues faster and drive through new ideas.
Creativity – Despite being thought of as a one-note part of the business, credit management can be creative and forward thinking. Use colleagues to bounce ideas off and find inspiration.
Communication – If different departments are involved in the business’ finance, naturally communication between these teams will become wider-reaching and more open.
Shared responsibility – It’s a fact of life that people have different strengths when it comes to their work. By encouraging more people to help with payments and cash flow, responsibility can be assigned to the person who will be best at each different task.
Transparency – When business functions remain separate, it is easy for information to be confused and blame dished out. With cross-team collaboration, employees and colleagues will have a better understanding of how the business works as a whole.
So if accounts receivable is repositioned as an integral part of the organisation – plugged into all other areas of the business in a strategic sense – then substantial improvements can be made business-wide. That’s useful to know, but how do you go about putting this in practice?
Identifying stakeholders and understanding their impact – Draw up a list of who the relevant stakeholders are; they could be anyone involved in the business, so consider everyone from board members to junior employees and customers.
Empathy – Once you know who you need to engage with to better your cash flow, you then need to try and understand them. How much influence do they have? Could they undermine your efforts if they decided to? By understanding the challenges they are facing, you can start to put together a mutually-beneficial relationship.
Clear planning – Communicating your messages clearly is key to success. The software you use for chasing and processing payments can make a major impact in this area too. Use a system that allows all stakeholders clear visibility into the accounts process – a vital way to evidence the changes you are making and the effects these are happening.
Results measurement – As useful as data is, it can still be difficult to measure your success without tangible and defined goals. SMART goals (specific, measurable, attainable, realistic and timely) is a good place to start.
Making achievements heard – Have you improved the payments process of your organisation? Have you freed up time for colleagues to focus on admin? Is your sales process now more efficient? Then let people know – improve morale, increase buy-in and show people the power of a collaborative approach.
Technology is key – Technology is fundamental in underpinning a lot of good practice for payments. Automation plays a huge part in eliminating the time taken on cash-flow – freeing you up to spend time strategically on this process and involving the rest of your business.
Changing the way credit management is perceived and worked with in your organisation isn’t an overnight process. However, by keeping in mind the difference that this process can make to your business, and the foundations for putting this in place, you have a strong basis for ensuring your cash flow is kept front and centre by everybody within the business.
In the second of this two-part series, we look at how to identify pertinent stakeholders and incentivise them properly, how to overcome internal challenges and fundamentally the ways in which you can combine this knowledge to ensure cash flow and payments are seen as a vital cog in the machine of your business.
We recommend to download our whitepaper: Involving Stakeholders
Get in touch today!
OnGuard credit management software has been designed to simplify and streamline the work of credit management teams, and our tools can help you involve the necessary stakeholders and maximise results. To find out more about OnGuard and how it can make you and your customers feel good, contact us today on +31 (0)294 25 6666 or email@example.com.