When was the last time you took a look at your business credit management strategy?It is easy to get stuck doing the same old thing just because it’s what you’ve always done; but what worked for yesterday, does not always work for today. If you find yourself short on the cash you need to grow your business and/or have a hard time getting customers to pay you on time, there is one critical question you need to ask yourself to ensure you’re making the best credit management decisions. Who are you as a company today?You may have started out serving one market segment or one type of customer, but as your business changes over time, so too will your customers. The type of customer you are selling to will directly impact your credit sales, collection, and management strategies. By taking a close look at your company and how it has changed over time, you can shed some light on some of the underlying business credit management issues that have led to your accounts receivable trouble. From there you can utilize tools and best practices for faster invoice collection. Here are a few small factors to consider to help you define the company you are today.
- Are you a B2B or B2C company? You may be both. Take a look at your customers to see which percentage of them are business customers and which are consumers. Also look at your credit collection problems- what percentage of them fall into your consumer customer category and which fall into your business customer category?
- What type of customer do you serve? Beyond B2B or B2C there are many other ways to get a clear idea of who your customers are. For example, are your business customers commercial, government, or industrial? Depending on their classification, they may have specific needs that must be addressed in your business credit management and collections strategy.
- What is your industry? This is an important factor because there are many industry specific solutions and best practices for business credit management depending on your particular industry. For example:
- Construction companies may need to manage mechanics liens for non-payment,.
- Transportation companies need specific information regarding deliveries and freight bills to effectively manage the credit and collections process.It’s important to understand what invoices and accounts are represented in your industry segment, or segments, before you start crafting a business credit management and credit collections plan, since strategies that work in some industries will not be as effective in others.
- What is your average customer size? Do you serve small, medium or large businesses? What is the distribution of these customer sizes across your business customer base? Strategies that work for small companies may be less effective than strategies you implement for larger business companies.
By taking the time to fully understand and answer the above questions, you can put a finger on exactly who you are as a business today, who your customers are, and what needs to be done to improve your overall business credit management strategy today for better results tomorrow.