Reducing days sales outstanding (DSO) in a positive, customer-friendly way is essential for business continuity, but at the same time requires utmost accuracy in customer communication. Automating many, time consuming manual tasks of credit management is inevitable to make these ends meet. Flowize offers a powerful business process automation tool that breaks down information silos by interlinking with all necessary internal and external information systems.
Credit management is rapidly becoming a vital function for businesses with large customer bases. This is caused by the ever-shorter sales cycles. Reducing days sales outstanding (DSO) in a positive, customer-friendly way is essential for business continuity, but at the same time requires utmost accuracy in customer communication. Automating many time consuming, manual credit management tasks is inevitable to make these ends meet. Flowize offers a powerful business process automation tool that breaks down information silos by interlinking with all necessary internal and external information systems. Using up-to-date data, it provides automated workflows for customer communication trough any desired channel. Reaching debtors with highly personalized messages via channels that work best for them, from WhatsApp or text messages to email or printed letters, has now become faster and more accurate, ensuring better payment and excellent customer experience.
1. Future proof credit management
The increasing importance of credit management
The fast-paced digital era offers speed and convenience to customers at an unprecedented scale. Quick and easy access to information leads to short sales cycles and accelerated buying behavior. In this changing environment credit management rapidly becomes a vital function to secure financial performance by decreasing days sales outstanding (DSO) and keeping a keen eye on the cash flow.
Good customer experience
However, good credit management also extents to creating excellent customer experience. Happy customers pay faster, are more loyal and provide repeat orders. According to Graydon, over half of all bankruptcies can be attributed to poor credit management. This puts the credit manager at the intersection of the customer’s interests and the interests of the company in terms of good business performance. In this unique position, credit management has become one of the pacesetters for continued growth.
Credit management involves more than just reminding customers to pay. It involves the complete process from order management, credit analyses of customers, fulfillment and shipping, followed by invoicing, account receivables management, debt collection and reporting. Each step in the process is a touchpoint between the customer and different business functions of the organization. Striking a balance between financial targets and customer experience at these touchpoints, is the defining factor for successful credit management.
Shift to prevention
The ever-shorter sales en purchase cycle now shifts the emphasis in credit management from monitoring and execution to prevention of poor payment performance. This means determining the customer’s creditworthiness in advance, monitoring customers for credit risks, engaging in customer relations en detecting late payments in advance. Preventing bad debt from rising also involves close investigation of order management, flawless shipping and accurate invoicing.
Unlocking information silos
In order to keep track of every piece of information that impacts payment of invoices, the access to data in separate information systems is indispensable. Customer Relationship Management (CRM) systems list information relating to contacts, agreements, previous interactions, while order management keeps track of received orders via email, sales reps, Internet or EDI. Once the product has been shipped from the DC or warehouse, or the service has been delivered, the invoice is created and sent to the customer for payment. Because credit management has an overarching function, unlocking information silos in different business functions is the key to future proof credit management.
2. Debt collection trends and challenges
In an ideal situation operations run smoothly and customers as well as employees are satisfied. The reality is that each customer and every business process entails a number of risks that need to be managed and mitigated on a daily basis. A large part of the credit management work still involves extensive manual investigation. Following the trail of interactions, prior to payment issues, requires information from all kinds of sources, from business data suppliers to correspondence and ERP-data on project delivery, invoicing and logistics. This comprehensive process requires time consuming due diligence in order to approach each customer correctly and improve the sales to bad debt ratio.
Part of the digital age is the great variety of communication channels that consumers have adopted to suit their lifestyle. The average debtor carries multiple obligations and uses more channels than ever before to organize and pay debts. A customer-centric approach inevitably requires omnichannel communication, including text messages, WhatsApp and Facebook Messenger as well as handwritten letters, email and phone calls. Integrating these channels into business information systems is quite a challenge. But it will lead to more productive debt collection and decreased DSO. Innovative business process automation tools, such as Flowize, enables faster adoption of omnichannel communication through proven solutions.
One of the major trends in customer behavior, enabled by online technology, is the idea of putting usage over ownership. This is called collaborative consumption. Why buy a drill if what you actually want is a few holes? Or own a car for years on end, if you only occasionally need to go somewhere distant? Skipping inconveniences and enjoying the desired service on demand has shaped a growing breed of customers that demand simplicity, transparency and accessibility outside office hours. And most of all, they are used to being in control through self-service platforms, such as payment portals in case of credit management, or personal portals from service providers such as Spotify or Netflix. They expect mobile interfaces to be a part of the collection process and they expect AI to be applied to it in order to make everything run more smoothly.
Automation is key
The only way to handle complexity at speed and scale is automation. Although it might sound contra dictionary, the use of technology is conditional to achieve a personal, customer friendly experience. Not only internally, using workflows and setting up links to databases in existing information systems, but also externally, connecting to communication platforms of businesses and consumers. A higher degree of automation will eliminate error-sensitive manual processes and increase speed. Most effectively, it will enable good cash flow management and a sound financial position.
3. Convergence of finance and customer experience
Impact on stakeholders
The need for due diligence stems from the impact of credit management on debtors as well as internal stakeholders. Sales representatives are immediately affected by interference with their customers from financial side. Cutting off deals, due to negative credit information, won’t go without at least some strong arguments. The same goes for marketing efforts aimed at customer retention or customer service centers that need to account for arrangements and commitments. But all of these disciplines wouldn’t last without the required net working capital to keep the business running. The retention of satisfied and accurately paying customers is a joined goal.
The complete customer journey
Although the customer journey is generally attributed to marketing, sales and onboarding activities, the fact is that actually being a customer starts after placing an order and enjoying the products and services on an ongoing basis. The most frequent encounter with the company is not through sales or marketing but finance, delivery and support. The ‘debtor journey’ is where customer experience collides with finance. Well-orchestrated customer communication, through appropriate channels and based on accurate information, will result in a smooth and pleasant experience for the end customer. Answering up to higher expectations will safeguard the companies’ capital in its customer base.
Barriers for improvement
For most of the businesses, credit management and debt collection, are still lagging behind in automating error prone manual processes compared to other business functions. This offers a huge opportunity to leap forward, especially for enterprises with large customer bases. If the benefits are obvious, the logical question is: ‘What is keeping companies from implementing a connected platform and using automated workflows?’ This starts with a shift in culture, from a reactive to a proactive attitude regarding credit management. Apart from the drive to improve the process, the necessary IT support and project management often exceeds the available capacity. Also, the lack of expertise in this rather specialized area calls for the right partners. In the end, the risks involved in failed projects are a strong threshold to rather keep going the way things are.
4. Connecting the dots
Make or buy
In order to stay on top of business, a clear focus on core activities leads to a make or buy decision. This especially goes for supporting functions such as Finance and IT, which in the past have had a tendency to expand continuously. However, the speed of technological innovation makes it virtually impossible to keep up with new developments, while maintaining the existing IT as well, including legacy systems. This is why more organizations prefer to buy instead of make innovative solutions and stick to in-house handling of mission critical processes. Partnering with specialists that offer proven new concepts such as Flowize, gives them a head start over of reinventing the wheel.
Business in control
The centralized function of most enterprise IT-organizations result in an overwhelming demand for innovations and support activities. From the business side this frustrates flexibility as they have to get in line. Another issue regarding custom in-house development is the lack of scalability. For every change or expansion new interfaces need to be build and the implementation requires individual handling. Due to the complete support and scalable design of Flowize, involvement of IT is kept at an absolute minimum. This makes it possible to become more self-supporting from the business side, but to be able to access specialist support when needed.
Integration with best of breed
As a best of breed solution, Flowize connects to the internal IT-landscape, enriches the data using externa sources and provides highly automated omnichannel communication to customers. The cross connectivity makes it an ideal solution to handle the multi-system IT-landscape. This not only unburdens the IT department, but offers more control and more functionality to credit managers.
5. A complete Risk and Credit management solution
Flowize is a complete suite that enables businesses from every seize to connect their systems, create the desired content and automate business processes using customized workflows. Since the introduction in 2015, the solution continuously evolved, based on the needs and demands of a growing number of organizations. It now supports 150.000 operations and 100.000 members. The ability to unlock information systems, due to good integration with API’s and databases, makes it a robust solution for order to cash management.
Intelligent customized workflows
Order-to-cash involves all business processes related to receiving and processing customer sales orders, delivery of goods and services, customer communication, and payment. Similar to customer journeys, Flowize can support the ‘debtor journey’ with highly customizable workflows. For instance, whether to send an email or to send a printed letter, attaching external credit information, or offering access to an online payment portal. Based on a set of rules, the system will check en continue to the next step. Once the connection is established and the desired workflows are set up, the system saves huge amounts of time and manual labor.
The advanced integration allows Flowize to manage the data structure and deliver data from every information system, using only one connection. This comprises internal data sources as well as external sources such as Graydon or CreditSafe. The possibility to add fields, without having to adjust the source system, enables personalized communication without burdening the IT team. This allows for productive cooperation between business and IT.
Issuing the right message for different customers at different occasions is largely enhanced by means of the content builder application. Using the content builder, you can craft personalized messages in Flowize, so no need to exit the system. Customized PDF and HTML outputs that are desktop ready and optimized for mobile can be generated and sent automatically within the existing workflows. Personalized messages, addressing debtors individually, are decisive to counteract aversion to payment issues.
The integration with a variety of popular apps allows for communication with customers through their favorite channels. The drag and drop function to add new applications into existing workflows saves time and effort of getting the right IT support. Integration through simple drag and drop makes it easy to stay relevant for customers through platforms that connect to their daily life. From Facebook to Twitter, WhatsApp or Text.
6. Looking forward
The ongoing integration of online platforms in the daily life of customers makes highly automated credit management inevitable. Accelerated buying behavior and short sales cycles force credit management to catch up without losing track of accurate, compliant – and most of all – customer friendly communication. Future proof credit management starts with assessing the current situation and setting up a business case for implementation of a proven and scalable solution such as Flowize or any other system that offers the required functions.
It all starts with gaining knowledge and developing a clear vision. For more information, references and a comprehensive demo visit feel free to contact Flowize. We’re there to support you.