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In many organisations, credit management is limited to traditional collection activities: quickly and effectively collecting outstanding invoices and preventing credit risks. However, when approached more strategically, credit management impacts the overall customer experience and can therefore influence business results both negatively and positively.
5 perspectives on customer-oriented credit management
To effectively deploy credit management as a strategic instrument, it is essential to look beyond just collecting invoices. By adopting different perspectives, organisations can structure their credit management process to contribute to both healthy business operations and customer satisfaction.
1. Flawless customer onboarding
Customer-oriented credit management actually begins with making a purchase and entering into an agreement. Clarity, transparency, and ease of use for your customer are essential in this process.
- Ensure a clear agreement. Communicate clearly about the service, duration, terms, and price structure – for example, in the case of a discount period.
- Offer flexible payment options. Not everyone receives their salary on the same day of the month. Therefore, offer customers the freedom to choose their own collection moment, especially in the case of recurring payments.
- Ensure integrated collaboration. Optimal alignment between sales and credit management ensures that customer onboarding runs truly flawlessly.
2. Communication as a strategic instrument
Communication is more than just a tool; it’s a strategic lever for customer engagement.
- Use simple language. Good communication starts with clear language. Use words that almost everyone understands. This prevents confusion among your customers and encourages faster payments.
- Opt for a personalised approach. Within credit management, communication with customers is often standardised, while customers are (of course) not all the same. By tailoring your communication style and channel to specific customer groups, you increase the likelihood that your invoice will be received, read, and paid.
- Be proactive in providing information. Inform customers in advance about possible changes or deviations. At FIQAS, we call this ‘action before collection’. You send your customer a notification that the invoice amount will be higher than usual, for example, because more was consumed that month or other services were used. This prevents surprises for your customer and thus possible reversals. Also, be proactive when a direct debit fails due to insufficient funds. Let your customer immediately change the collection moment themselves – for example, via a self-service page.
3. Clear invoice
Does your customer understand what they’re paying for and is the amount recognisable? A clear invoice prevents confusion and accelerates the payment process.
- Use recognisable specifications. Ensure that each item on the invoice is understandable.
- Have invoicing and credit management work together. Integrate invoicing and credit management for a better customer experience. The credit management department has direct insight into the strengths and weaknesses of the invoicing process. Through better collaboration, the collection process becomes simpler and faster.
- Create clear invoices. Clear and comprehensible invoices build trust and lead to faster payment – and thus a lower DSO (Days Sales Outstanding).
4. Nuanced reminders (dunning policy)
Don’t treat payment arrears as a black-and-white scenario. Not every late payer is a defaulter.
- Choose a differentiated approach. Distinguish between incidental and structural payment problems.
- Be empathetic in your follow-up. Identify potential financial challenges with your customers early on. A first reminder often ensures that a forgotten payment is still made. If this is not the case, then this – combined with, for example, historically poor payment behaviour – is an indication that a payment is being deliberately withheld or that there may be financial problems.
- Offer customer-oriented payment support. Offer flexible payment arrangements for customers who want to pay but temporarily cannot. Agree on what can be paid and make arrangements for the outstanding amount. Document the agreements clearly and comprehensibly and confirm them.
5. Technological integration
When you choose differentiated (personal) customer contact and combine this with closer collaboration between different departments, this naturally impacts the supporting credit management system.
- Choose smart systems. Implement technology that makes it possible to differentiate by customer (characteristics), payment behaviour, and credit risks.
- Optimise your processes. With the right automation, prevent customer orientation from leading to unnecessary complexity and higher costs.
- Achieve an integrated workflow. Connect credit management with other business processes such as sales, marketing, and invoicing.
Transform your business with strategic credit management
Credit management is not an isolated activity, but has a strategic function that directly contributes to customer experience and business success. By adopting a nuanced and customer-oriented approach – supported by the right IT systems – you create mutual benefits for both customers and business operations.
The strategic credit management approach delivers measurable results:
- Enhanced Net Promoter Score (NPS);
- Increased customer advocacy;
- Improved revenue retention;
- Reduce write-offs and, of course, lower DSO.
Ready to elevate your credit management strategy? At FIQAS, we specialise in strategic credit management solutions. With over 30 years of order-to-cash expertise, we help leading organisations across the Netherlands and internationally transform their credit management processes through strategic automation and optimisation.
