June 30, 2022
How to digitize the credit management process and reduce operational costs.
Traditionally, the credit management system is an organizational structure that, through dedicated actions and resources, aims to improve the set of business activities aimed at collecting trade receivables.
In this article, we will address the critical issues that any company faces in carrying out its business activities and how digitization is the best solution to manage the credit that is generated.
Credit management
Credit management encompasses all processes aimed at maximizing a company's ability to collect receivables from its customers (or own supply chain), while ensuring that related operating costs are contained and the likelihood of customer churn or termination is reduced.
Addressing credit management by understanding it as credit recovery activities is limiting and reduces the effectiveness of the process as a whole. The concept of recovery certainly remains the central element of the broader category of management, but all related or preparatory processes must also be addressed in order to prevent the emergence of delinquent situations and offer all the levers and tools to regularize these situations in the shortest possible time.
The critical operational issues
The most critical issue for companies is definitely the "cost" item that needs to be incurred for credit management. In addition to the infrastructural burdens, mainly related to the development and maintenance of management systems, the greatest effort is concentrated on the operational teams dedicated to credit recovery activities (by way of example: reminders, reminders, recovery).
Containment of operating costs leads to industrializing these activities as much as possible, activating a vicious cycle of reducing the effectiveness of these activities.
In other words, customers become "accustomed" to not paying, as they sense that upstream in the process there is a progressive latency in the effort put into performing such activities, i.e.,they"do not fear" the consequences with respect to a possible default.
Added to this is how the risk prevention activity, which has developed strongly in recent years, although structured and well-organized, presents reduced effectiveness especially in the Consumer and Small Business markets, i.e., which is limited to trivial warnings only in the case of objectively risky situations (e.g., reports to the Central Risk Office).
Cues for improvement
In order to improve credit management and overcome the critical issues related to an activity that is extremely focused on recovery alone, several aspects need to be addressed:
1
Identify all those standard and repetitive activities that are performed by operators with clients and that could also be handled without, in self-care;
2
Do not neglect interaction with the client, to effectively enable the client to be able to manage his or her debt using all available levers;
3
In the interaction with the customer, it is necessary to understand the reason for non-payment in order to put in place actions to reduce the risk of the debt arising (every aspect should be manned, from the description of offers or products, to the display of items on the invoice, available payment channels).
The Credit-easy solution
Credit-easy is the solution we offer at Increso for credit management, developed to offer customers the ability to interact independently on an innovative and easy-to-use channel on which they can perform all the tasks they would typically perform with an operator.
Customers interact through their smartphones on dedicated, personalized pages.
What can you do, thanks to credit-easy?
- Access independently and with freedom of schedule;
- Verify your own bills;
- Pay them using all channels available in the market today;
- Request an installment or deferment, according to the rules in the company;
- Report a payment already made;
- Manage a refund or credit note;
- Update your biographical and contact information;
- Formulating a complaint.
Access to pages can be conveyed on low-cost channels (such as SMS, email or Whatsapp), which enables continuous interaction with the customer to be enabled and any escalations on operator can be shifted to said channels, thereby also reducing the unit cost of management.
On each page, the client is guided with simple and quick interactions to make explicit the reasons for non-payment or to put in place any corrective actions to prevent the emergence of the debt position.
The customer is not asked to download any app: they can thus enjoy a simple experience that is in line with their expectations, while for the company this allows near-real-time intervention for adjustments to the solution.
Credit-easy is configurable and fully customizable-meaning that our service managers can design operational flows to make them perfectly adherent to business processes and integrated with management platforms.
All in logic as a service, in compliance with the highest standards of security and privacy.
Experience and innovation at your service
Contact us to define together a strategy tailored to your business. And for your customers.
