For any firm that allows its buyers to finance their purchase, credit management is an important operation, as it impacts massively on cash flow and the amount of available capital. A credit manager’s duties are therefore vital, which is why it pays to employ a specialist.
Each business will have its own credit procedures and policies, with terms and debt collection practices typically changing between firms. Employing an in-house specialist will allow this approach to remain consistent and be relevant to the customer’s needs, while processes can also be refined. In time, the individual or team will also understand how comfortable your firm is with taking risks, which helps to mitigate credit risk and align the processes with business goals.
Outsourcing credit management comes with its own risks, and having a specialist onboard removes these threats by keeping control firmly in your hands. Any changes to policies can be implemented quickly, and you’re not competing for the attention of a third party from other firms.
With a point of contact within your business representing the credit management operation, stronger customer relationships can be built. This not only helps you retain these buyers by personalising customer service and adding value, it can also shorten days sales outstanding (DSO) as they will be more willing to pay on time. This should see instances of late payment and bad debt reduce, while debt collection also becomes a far simpler task. Through frequent contact, your in-house specialists can learn how to effectively manage each individual customer, resolving issues quickly and with no damage to the relationship.
Investment in a credit management specialist is a worthwhile expenditure, as maintaining a healthy stream of cash into the business from debtors is key to keeping it running smoothly. Credit checking is one aspect that can remain outsourced, as it frees up resources to be spent on important day-to-day tasks.
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