Improve your working capital in 4 steps with customer credit management
Improve your working capital in 4 steps with customer credit management
A healthy working capital is important for a business owner to be able to pay your daily expenses. Think about paying salaries and suppliers. Do you not have sufficient working capital? Then that can have far-reaching consequences for the health of your company. It is therefore important to keep your working capital up to standard. An effective way to do this is customer credit management. With customer credit management you analyze the behavior of your customers, so you know exactly when to expect your money. In this blog we give you 4 tips to implement this as effectively as possible throughout the organization.
1. Set goals that apply to the entire organization
Want to approach your customers in the most effective way possible? Then set up a clear workflow that applies to the entire organization. Do this even before you do business with a customer. So you agree company-wide which actions are taken in which situation. Think about the payment period that you maintain, when the customer can expect a payment reminder, when you send a reminder and when you proceed to a collection process. In other words, the entire organization must measure, monitor and adjust where necessary.
2. Record reasons for non-payment
Are your customers not paying the invoices you send them? If so, it pays to find out what the reason is. Understanding why your customers sometimes don't pay or pay late can prevent future hassles. Perhaps a credit check shows that your customer is not reliable at all, or your other customer simply forgot to transfer the invoice. Record for each customer the reason for non-payment, so the entire company knows how to approach that customer in the future. Sometimes it means being stouter for your customer if payment is just not made. By keeping track, you can find a structural solution for following up with your customer.
3. Segment customers by their payment behavior
It pays to classify your customers into groups in advance. You classify your customers based on risk, company size and other parameters you set. Is a customer known to you as a good payer? Or do you have that one customer who just can't seem to pay on time? With segmentation, you know that you will have to follow up with your bad payer more often and can be stouter, while you may be able to let go of the good payer a bit more. You can also set up appropriate communication channels for each group, allowing you to effectively approach your customer. More on that below.
4. Approach your customers with the media appropriate for them.
Do you want your debtor to pay quickly? Then good communication is important. In your communication, make it clear what invoice is involved, when the deadline expires and what the exact amount is.
How you approach your customer can also be important for prompt payment. Whereas with some customers you can send an e-mail, with another customer a formal letter works much better. And some customers may be fine with you sending a secure payment link via WhatsApp, if it has been shown that this way suits them. So tailor your communications to your customers, so that you get your money in faster and thus maintain your working capital.
MaxCredible software voor klantkredietbeheer
Voor een aanpak waarmee je echt bovenop je betalingen zit, kun je het beste overstappen op een automatisch proces. Daarmee bespaar je veel tijd, kosten en moeite – zeker als je klantendatabase groeiende is. Je richt één keer je workflow in en segmenteert je klanten in betalingsrisico’s en meest effectieve benadering. Op die manier kun jij er van uit gaan dat je werkkapitaal altijd op orde is.
Met de innovatieve MaxCredible Customer Credit Management software you speed up the order-to-cash cycle significantly, for lower costs. Automating the credit management process really pays off when you look for a customized solution that automates the credit management process.