Invoices paid too late or not at all are a direct attack on your company’s liquidity. Reducing payment defaults is and remains a priority for your company in order to keep more working funds. The faster the payment, the shorter the cash conversion cycle (the time funds need to loop through your exploitation cycle) and the smaller your working capital requirement. The more certain you are to get paid, the less risk you run. Therefore, optimise your receipts and reduce your need for working capital.
1 in 4 bankruptcies are due to non-payment
(Source: Euler Hermes Global Economic Outlook)
Why would you spend precious time and effort to gain customers who pay either late or not at all? Map out your potential customers worldwide and make a strategic selection.
Credit management places customer relations management within a broader commercial framework. Customer credit is part of an integrated sales and marketing strategy. Credit management allows marketers, sellers and credit managers to work together in order to sustainably and profitably sell to customers who pay their invoices on time. Moreover, a credit insurance policy is the perfect instrument to offer better payment conditions.
An integrated credit management strategy reconciles the sometimes conflicting responsibilities of the commercial department (marketing and sales), which wants to realise as many leads and sales as possible, with the financial department, which strives for a maximum return with as little risk as possible.
The result of an integrated approach is a strategic vision that directly links turnover growth and maintenance to profitability growth based on sustainable and profitable customer relations.