Credit Management Check
Does your organisation provide tactical credit to customers with varying levels of success or has it ever considered strategic credit with guaranteed structural success?
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Highest number of points > 80% is a 4 or 5
Situation
Your organisation approaches customer credit management strategically. The aims are achieved on the basis of input coming from all departments. Each department contributes in their own way towards achieving the aims. There is a monitoring system that allows everybody to follow the efforts and results.
Repeated reasons for non-payment are noted and cleared up in the departments where they occur. There is a company-wide incentive scheme whereby contributions made to help the customer credit management system achieve its operating aims are rewarded.
This results in high levels of both customer and employee satisfaction and also a DSO that is well below the sector average. Customer Credit Management is therefore on the agenda throughout the company and receives priority. Your company leads the sector.
Culture
Together the entire organisation takes on the responsibility and uses the same Customer Credit Management jargon and talks in terms of customers.
Results
Your organisation has a cost advantage over the competition thanks to efficient organisation, minimum capital outlay, motivated personnel and loyal customers.
Action
Customer management can be optimised through experimentation, testing and learning. Celebrate achieving the aims so that Customer Credit Management remains alive and kicking within the organisation. The MaxCredible software functionalities are fully utilized so that all the advantages can be achieved.
Average level: between 40% and 60% is between 2 and 4
Situation
Your organisation approaches customer credit management tactically. The aims are set by the finance department. The finance department is supported by the general manager and it motivates the other departments to contribute towards achieving the customer credit management aims. There is one system for following up the efforts of the finance department.
Reasons for non-payment are always given on a periodical basis during management meetings where the general manager and the director concerned request that action is undertaken. For the finance department there is an incentive award scheme that helps contribute towards achieving the aims of the customer credit department.
Both the customer and the employee levels of satisfaction are average and the DSO is also on average for the sector. Customer Credit Management only appears on the financial agenda and periodically on that of the general manager, but it is only given priority by the finance department. Your company is next in the sector.
Culture
Customer Credit Management remains the responsibility of the finance department. Being approached by this department tends to be tedious. They talk in terms of debtors.
Results
Your organisation has no cost advantage over the competition. There remain costs that create no added value because of inefficient processes, unnecessary capital outlay, high turnover and absenteeism of personnel and loss of customers.
Action
Anchor Customer Credit Management at a strategic level. Take a top down approach. The management team leads. Introduce processes, systems for measuring results and rewards. The management team should actively advertise Customer Credit Management internally over a period of two years.
MaxCredible software is used as an enabler during this development process. An increase in the use of MaxCredible software functionalities will start taking place.
Low level: between 40% and 60% is between 1 and 3
Situation
Credit management is carried out. Any aims are set up by the credit managers on an ad hoc basis, and only relative to the problems that crop up. The activities are dominated by treating the symptoms. There is no time for structural solutions for the reasons for non-payment.
A limited measuring system is in place that follows the performance of the credit managers. Recurring problems are not noted and therefore always return. The credit managers are penalised instead of being rewarded.
Both the customer and the employee levels of satisfaction lie well below the sector average and the DSO is well over the sector average. Credit management only appears on the agenda of the credit managers and periodically that of the financial director, and only on an as hoc basis with the general manager when there are liquidity problems. Your company is disconnected from the sector.
Culture
Hostile, thanks to the enormous workload in the credit management department and the isolation in which the department finds itself within the organisation. This culture manifests itself externally through poor customer relations. The customer is the enemy.
Results
Your organisation suffers a significant cost disadvantage with respect to the competition. Both the systems and the proper corporate culture are missing. People are demotivated and there is a very high level of personnel turnover and absenteeism. Levels of customer loyalty are extremely low resulting is high losses.
Action
Stage by stage, move from reactive to proactive credit management. Top down. Management leads. The company aims are drawn up at the very start and all departments become involved. Implementation starts with a limited number of tasks. The Customer Credit Management department is given the time to develop its new activities.
New processes and systems are implemented from day one. The use of functionalities is extended step by step on the basis of inclusion according to the ability of the organisation. A project manager is appointed to supervise the process.
MaxCredible software brings structure to the organisation and draws up the route map for organisational development thus enabling the transition from normal credit management to Customer Credit Management. In the beginning only a limited number of functions are used by the organisation. The demand for functionalities increases the more the system is used. These are then released by management as required.
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