Does Your Company Really Need Credit and Collections Software?
The real answer is: It depends. I know what all of you are thinking – Here’s the blog posting which is going to be a complete advertisement for his company. Well, rest assured, this is going to be more of an infomercial (edutainment even!) than an ad.
What we’ve found is that there are many factors that drive companies to enhance their receivables management process with credit and collections software. Companies really have to start by looking at how well their A/R departments are doing and compare that with the averages and Best In Class figures for their industry. After all, if your DSO is 31 and the Best In Class DSO for your industry is 30, you may not have a significant problem to solve. Some of the A/R metrics that companies should be looking at initially also include average days pat due, percentage of A/R over 90 days and Deductions Days Outstanding. You can find a tremendous wealth of information at the Credit Research Foundation. They are truly a class organization.
Next, you really have to look at the capabilities of your company’s existing systems. A lot of major companies have ERP systems like SAP, Oracle, JD Edwards or Baan. Many others have homegrown legacy systems. And some have multiple ERP systems in different divisions. The challenge is to arm your credit and collections staff with the tools that they need to reach the goals you have put in front of them. The major problem with many ERP systems is this: they are transactional systems. What this means is that ERPs are meant to serve as the repository for documents that facilitate a business process like sales order entry or invoicing or shipping. They typically do not have the specific functionality that enables a credit and collection team to completely do their jobs from conducting credit reviews, managing A/R portfolios, making collections calls, to resolving disputes and applying cash. ERP systems just aren’t able to be that specific; they are more the general backbone tool for housing all of the business data, if you will.
So where does credit and collections software come in? Well, if you see shortcomings in your ERP systems, then credit and collections software can really take your team to the next level. Everything from doing portfolio management (with full slice-and-dice payment analysis), to automating collections tasks (like faxing/emailing invoices) to using workflow to quickly resolve disputes and deductions is available. In addition, all those yellow sticky-notes that your credit and collections department uses to keep track of different accounts and invoices all goes into one repository for future reference. For many companies, having credit and collections software is equal to having a number of extra people in the A/R department, all at your beck and call. A lot of companies have been able to their DSO and improve their A/R metrics to be more line with Best In Class figures. Not to mention being able to tie together all of those disconnected back-end systems into one single view of receivables.
However, there is one thing I'd like to point out. In your quest to look for a software solution, don't forget the most important thing: You have to have the right people in place. Make sure you have the best people managing your A/R and you will find that the domain expertise and efficiencies cannot be beat. Providing the software to a group of seasoned, motivated employees is just the icing on the cake.
So enough with the ad, already. If your company needs more information on credit and collections software (or deductions management software), check out 5 Helpful Tips On Buying Credit and Collections Software. It might save you from making the wrong decision.

