Technology to the Rescue.(credit management)

The number of products and services available to credit managers is growing faster than ever. Twenty-five years ago, once you got past Dun & Bradstreet, there was not much more available besides collection agencies and some financial services. Back then, software was mostly on mainframes, and its receivables functionality was very limited.

Today, the story is quite different. New products and services seem to spring up almost every week, and while there are a lot of bold claims being made, it is now possible for savvy credit pros to find a marketplace solution for most any credit and collection management problem. Unfortunately, a lot of problems that credit pros faced 25 years ago are still around because receivables software remains, for the most part, not up to the task. The good news is that bolt-on software as well as Internet products are filling this void.

How Technology Helps

The key, then, is to cut through the confusion to find the applications that will work best with your company. That requires an understanding of the basic challenge facing trade credit operations. For most companies, their biggest dollar exposure is confined to a relatively few large customers. These accounts require extensive support. The problem then arises as to how a limited credit staff can provide sufficient coverage to the relatively large number of smaller dollar accounts. Ignore them, and in short order they will clog your system. If you cannot balance coverage of your large and small accounts, it is not long before DSO starts rising.

The prime benefit of technology in the service of trade receivables is to automate routine and repetitive tasks so that the large majority of customers of lessor importance can be managed expeditiously in order that sufficient attention can be focused on the minority of more important accounts. With this in mind, here then is an overview of the key technologies available to corporate credit departments and some of the leading venders in each class.

Collection Software

Chances are if a credit department is under performing, it is because insufficient time is being devoted to collections. With all the clerical activities that collectors must perform--gathering documentation, looking up information, keeping records up-to-date, faxing and so forth--it is not surprising that too few customers are being contacted on a daily basis. Part of the problem, as has already been mentioned, is that for the most part neither accounting nor ERP (enterprise resource planning) software provides sufficient credit and collection functionality. One notable exception is NMC Technologies' CA$H Machine. This software is a comprehensive accounts receivable module that includes credit analysis, collection, deduction management and automated remittance processing utilities. In addition, the COLLECTOR component of this software can be installed as a bolton to an existing A/R system.