Successful Credit Management During a Pandemic – Part Three
Welcome to the 3rd of our series of blogs to help you improve your ‘Order to Cash’ process in a practical way and reduce the negative effects of the pandemic on businesses.
See the previous blogs by clicking on the below links:
We continue to look at the elements that make up the Order to Cash to help you understand what areas of your business should be reviewed and strengthened and how to implement those improvements.
3. Dispute Resolution Management
When cash is tight, some companies look more proactively for excuses to delay payment. Therefore, a robust dispute resolution process is much more important in a recession.
Measuring and monitoring all disputed invoices will help you prevent the disputes happening in the first place, improved customer satisfaction and increased cashflow. We recommend you measure the following :
- Reason for dispute– publish and circulate a list of approves disputes codes to ensure consistency in reporting.
- Value– the value outstanding against any specific reason can assist with identifying underperforming areas of the business that need to be strengthened.
- Volume– adds an extra dimension to dispute measuring. For example, you could have £200,000 against a dispute code but is only 1 dispute. Conversely you could have 1000 disputes on the same code of £200 each. Whilst the total value is the same, the dispute with 1000 separate disputes against the same code indicates that area of the business needs attention.
- Time taken to resolve the dispute– measure from the date the dispute was reported as well as the invoice date. Improving average time taken to resolve disputes helps the customer relationship as well as cashflow.
- Resolution Owner– measuring disputes against the department responsible for the dispute e.g. Billing, sales, logistics, can be beneficial in spotting departments that require further development.
Reporting KPI’s across the whole business can also add a competitive element to improving number of disputes and resolution time.
We suggest you also measure reason codes on credit notes, this will help you to understand valid disputes against customer delaying tactics.
Noting customers with a high volume of disputes can assist identify areas of potential credit risk and should be fed into the Credit Risk Assessment process. Assigning a proactive collection strategy to the identified customers can be worthwhile allowing the disputes to be identified and resolved before the payment is due.
Communication with sales is key in resolving disputes and presenting a cohesive organisation to your customer. Have a process for sales to report disputes to credit control and vice versa. There is nothing worse than credit control pushing for payment for invoices the customer has already reported to sales as disputed.
What’s next?
Watch out for our next blog, “Legal action”
To gain a deeper understanding of some of the areas mention in our blogs, we have some free factsheets and are offering a free Credit Reference Agency Report. Click here for more details
To find out more about our services, click on the relevant links below:
- Support service– From as little as £30 per month
- Training– Low cost webinars and courses to help you improve cash Collection performance and how to use the Court’s Small Claims process.
- Outsourced collections– We become your virtual Credit Control department. All communication with your customers is carried out in your name
- Debt Recovery– Speak to us about our contingency fee service
- Consultancy– Review and strengthen your ‘Order to Cash’ process in a practical way and coach your staff to improve performance and cash flow.
Or just call us on 03332 413 203, email Contact@cmgroupuk.com
