Do you have any questions about credit management?

Below, you will find information about credit management and why it is so important for the functioning of your business. The impact and importance of properly monitoring and managing your debtors cannot be underestimated. For small, medium and large companies it is a complex but necessary task that requires a lot of time and effort. Fortunately, today there are digital solutions to make sure credit management runs smoothly.

What are doubtful debtors?

Dubious means questionable and a debtor refers to a customer (a person, company or institution) who has yet to pay his invoice. Dubious debtors are therefore customers for whom there is uncertainty as to whether they will ever pay their outstanding invoices. This is something companies regularly have to deal with.

What is credit management?

As the name suggests, debtor management is the management of debtors, also known as credit management. It includes the company’s activities with the aim of encouraging customers (debtors) to pay their outstanding bills more promptly.

Why is credit management important?

The importance of a good credit management is to keep your company financially healthy and to ensure it is properly functioning. If customers do not pay their invoices on time or, in the worst case, do not pay at all, you will end up in financial difficulties yourself. To avoid these problems, it is best to ensure proper management and follow-up of your debtors to make sure they will meet their financial obligations.

What are the benefits of software for credit management?

Credit management can be done either manually or automatically with the help of specific software. Whether or not to use software for credit management differs from company to company and often depends on its size. For small and medium enterprises that draw up a limited number of invoices on an annual basis or do not have enough debtors, the use of an accounting package or ERP system is sufficient. For many SMEs, specific software for debtor management simply has no added value or its use is still under investigation.

 

Larger companies, however, are in need of professional software for credit management. The managing of a large number of invoices and manual follow-up is an almost impossible assignment for them. Moreover, the use of an ERP system is not always user-friendly and in some cases offers insufficient possibilities and flexibility for an efficient debtor management.

 

There are many advantages to using debtor management software. An automatic follow-up is a must in order to keep the overview and to work in a goal-oriented manner. It is also a quick and easy way to track customers and suppliers and to make sure they pay their invoices in time, which is the ultimate goal of debtor management software. Moreover, such software is important for a company’s cash position and for paying suppliers in time, because if the customer’s outstanding balance is above the credit limit, deliveries are often simply not made. Furthermore, more volume can be handled without hiring additional staff. For some companies, debtor management software is a legal requirement. Finally, it ensures a more professional approach towards management, customers and suppliers.

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