With positive signs of economic recovery ahead companies must act now to capitalise on growth.
There’s no doubt that the last few weeks have been a bit of a washout with grey skies and torrential downpours blighting many of our staycation plans: but forecasters are cautiously optimistic that a return to sunshine is on the cards with some much needed blue skies and warmer days ahead.
I think the same holds true for the UK economy. Businesses have weathered some frankly, stormy economic conditions over the past 15 months, but thankfully there are some positive signs of recovery emerging on the horizon.
And so now companies must adapt again; move their focus away from surviving the storm and instead prepare to seize opportunities for growth. To succeed, whilst maintaining healthy cashflow and driving sales, it is essential that they take action now.
Persuing these 5 key strategies will help companies to minimise their credit risk, optimise their collections process and fuel future growth:
Key Strategy #1: Refine Your Credit Policies
The first step to implementing a first-rate credit-to-cash process. The basis of your process should be to make sure that your plan is in line with your needs and objectives, from credit-granting procedures to knowing how and when to begin collections proceedings. Your requirements may evolve over time, be it following a business expansion, merger or even an economic upturn, so it’s a good idea to regularly review the situation and adjust your policy as needed.
Key Strategy #2: Know Your Customer
Now that you have defined a comprehensive credit and collections policy that provides guidelines on decision-making for different customer types, you need to get to know your customer in order to accurately apply them. What better way to do that than collecting information directly from the customer? Customer onboarding is key to creating strong and successful customer relationships.
Key Strategy #3: Keep an Eye on Existing Customers
Once a credit assessment has been completed it is not set in stone. A regular review of all parameters needs to be done to adapt to changes in situation – the customer’s as well as your own. Evaluating risk and customer behaviour is critical when selling on credit so that payment defaults can be avoided. Customer risk should be continuously monitored in order to implement the most up-to-date credit and collections processes throughout the entire customer relationship.
Key Strategy #4: Be Flexible
The last year has shown just how greatly businesses are impacted by unexpected events. In order to succeed and overcome fluctuating conditions, flexibility is key when it comes to credit and collections procedures. Standardising rules and guidelines will ensure functioning processes, flexibility and adaptability, allowing you to easily respond to a customer’s changed situation (e.g., solvency, risk, payment behaviours, etc.). Your credit and collections strategies need to be adapted accordingly.
Key Strategy #5: Break Down the Silos
Often the teams involved in the process have access to different, yet relevant, customer information: A sales agreement can influence the customer’s payment behaviour, while erratic payment trends noted by the collections team affects the account manager. Facilitating communications between O2C teams encourages information sharing and ensures that all stakeholders have the right data at their disposal to make the best decisions at every level of the process. The collective vision and ultimate goal is to maximise sales while minimising cashflow risk.
Interested in finding out more?
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