When it comes to businesses and payments, there have always been only 2 types of transactions and Functions of Credit Management. Cash transactions. Businesses rely on both these kinds of transactions all over the world as one helps in keeping the business running with some working capital and the other helps in driving the business forward with more and more clients and customers.
Although cash transactions are very black and white, credit transactions lie in the grey area. A company needs to have a corporate team to handle credit transactions and tools such as accounts receivable software.
Functions of Credit Management Overview
Credits are one of the essential ways businesses function and therefore, handling credit is important and necessary. With even a little misinformation causing palpable damage to the company, it is important to have a system in place for Credit Management in an organization.
What is Credit Management?
Credit Management is usually affiliated with the finance department but is an individualistic team on its own. Credit Management is most necessary in organizations that deal with customers and clients who make purchases and avail services on credit.
It is also necessary to have such a team in large organizations that are into B2B (Business to Business) where most transactions are done on credit. Financial-based companies that offer loans, mortgages, brokerage, and other such deals also have a specialized credit management team force at hand.
So what exactly does credit management mean for a business? It is simply the efficient management of credit based accounts and transactions in an organization or business by creating workflows around these stakeholders which include daily, weekly and monthly tasks for retrieving these credits on time in an efficient and set manner as per the business.
In the bygone era, credit management was done manually with sheets and files and excel workbooks that tracked these transactions and relied on human-based data to follow up on accounts for credit based information.
With the advent of technology and software programs that are built around business solutions, accounts receivable software and credit tracking applications are able to achieve more efficiency with minimal staff interference, thus freeing up company resources. Not only is this software fast, reliable, and efficient, but it can also work in a very customized manner across offices, countries and regions at once.
Features of Credit Management Software
Credit Management software is now being used extensively so that critical credit management tasks can be done without missing out on important information and with minimal error. Below are some of the objectives of Credit Management:
1. Efficiency
Credit Management can help in increasing the efficiency of credit management decisions and workflows designed in a company by automating most of these actions
2. Time Saving
Most of these workflows have repetitive tasks such as sending out reminders, emails and notices for credit which can be easily automated by the software, thus saving time and employee resources
3. Consistent Workflows
Important decisions based on credit transactions, annual reports, setting bulk emails and notices and daily workflows can all be customized for the individual companies so that there is consistency and transparency in all these actions
4. Tracking Information
Tracking of bad creditors, bounces, accounts receivables, overall fund allocation, etc can be quickly generated based on which planning and forecasts can be developed for the company.
5. Optimization
The software can help provide insights into workflows and credit based decisions and help optimize these systems accordingly.