Smart Cashflow and Credit & Collection Management: the key to sustainability
Cash flow uncertainty due to delays in receiving payments from customers, partners or third parties has become a common concern for many organizations. The causes of this problem are not to be found in the digitization of increasingly efficient, automated, controlled and secured financial processes. It is the global economic climate that is impacting activities around the world. This requires a change in business strategy, especially for those struggling to pay their company’s debts.
While it is not necessary to further discuss the reasons for the current economic instability, it is important to emphasize that unpredictability is part of the life of any company. And that it is therefore its duty to implement the right practices and tools to ensure its sustainability.
This is not always the easiest thing to achieve, for small and medium-sized companies. But with simple and dedicated technological solutions, many pitfalls can be avoided for organizations recognized for the quality of their products or services, but not always responsive in terms of administrative and financial management.
The power of anticipation
For years, ERP systems have been considered a panacea for all industry problems, regardless of the sector. Nowadays, it is widely understood that to improve overall operations and benefit from reliable data, it is recommended that companies rely on a specific solution for their financial management – the core of any business strategy.
The availability of treasury is indeed, in the current context, particularly critical. The need to have short – and medium – term visibility of cash flow to pay invoices to suppliers and subcontractors is increasingly important, particularly to maintain a relationship of mutual trust.
It is also extremely vital, in a long-term vision, to be able to continue to grow steadily through investments in research, infrastructure, machinery, technology, talent, etc.
A new role for the credit collector
We understand the interest of technology, but let’s not neglect the human side. Having a credit collection unit within your company will prove to be particularly effective in terms of overdue payments reminders.
These reminders are perfectly documented using financial data from heterogeneous sources. Data which are then centralized in a single platform, consolidated, analyzed, and integrated into intelligent and automated processes. They are then processed by the treasurer and his team of dedicated professionals in a streamlined environment. This provides the company with visibility, agility, and responsiveness. There are also benefits for the treasurer, whose job is constantly evolving, offering ever more added value to his role and, ultimately, to his company.
Know your customers better
The new payment management processes favored by modern CFOs and embraced by treasurers allow companies to anticipate their liquidity availability and to generate multi-equation forecasting models.
It also allows better communication with customers, contractors, partners, creditors, etc., in real time, in full transparency and via channels with security reinforced by regulated protocols. This last aspect is particularly critical at a time when fraud attempts are proliferating.
In the end, cash management depends heavily on payments due from third parties. Having a credit management solution that can identify who is reliable and who is less so, allows organizations to benefit from a knowledge of their network that is extremely useful when future negotiations need to be initiated. Combined with a dedicated cash management solution, credit management operations become part of an increasingly agile and efficient corporate financial strategy.