Shifting away from spreadsheets for credit management

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For accountants who manage credit for their clients, organizing and sharing data, tracking orders, scheduling tasks, and managing workloads are key to long-term success and growth.

The type of software used to manage these processes, and store the data they generate, can help define the efficiency of a business's credit management function. Often, businesses fall into the trap of sticking with the standard software they have always used even if it is not perfectly suited to the work they are doing.

Unfortunately, by adopting this kind of approach, they will almost certainly be placing themselves at a significant disadvantage, especially with respect to collecting information about the credit management environment in which they are operating and in making that information available to key decision-makers within the organization to drive the business strategy moving forward.

Excel spreadsheets, for example, are often used for a host of working processes they were not specifically intended for. It’s certainly not the case that the software is intrinsically bad – far from it. Microsoft Excel is a powerful spreadsheet program that enables users to do a lot with raw data. The issue with Excel is that it is often the wrong tool for the job that credit managers are trying to do.

After all, spreadsheets are designed for number crunching, not storing masses of details about customers, their contact details, sales records and payment histories. It’s a problem that tends to get worse as the organization grows.

Using Excel for tracking credit management when the business is small is convenient and it may even work adequately for a while. Typically, however, it will not take long for the spreadsheet to become weighed down by complexity and this can lead to it becoming slow, with errors inevitably creeping into data and functions. When businesses are in that expansion phase, spreadsheets can become a source of aggravation, often resulting in slow processes and mistakes as their capabilities are stretched to breaking point.

Ambitious credit managers will, after all, want to achieve maximum results – and then make them visible through measurements and metrics. Daily measurements from their credit management environment showing the financial health of the receivables portfolio and how the team is performing against targets are essential for credits managers in helping them ensure they are staying on track with their ambitious plans.

Specialist software can help, allowing credit managers to generate the metrics they need, maintain control, and ensure even tedious tasks are completed to a high standard.

Credit managers will be no strangers either to other frustrations that impact spreadsheet-fixated businesses. Users feeling that they are having to do the same monotonous tasks repeatedly is usually a sign the business needs dedicated software. From inputting data to carrying out credit reviews to managing late payments, specialist software can make workers faster at their job and bring broader business benefits too.

Another key area is ease of access to information. Business systems are often overflowing with data. However, if users cannot access that data and process it into useful information, then it is unlikely to be doing the business much good.

Even with custom-designed Microsoft Excel sheets, it is typically a manual, time-consuming task to collect relevant data; keep it up-to-date and make sure it is accessible, and the risk of inaccurate financials and cash flow mismanagement is always high. With an ever-tighter regulatory environment to negotiate, the consequences of these kinds of errors can be severe both in pure financial and in reputational terms.

With the right dedicated credit management software, however, organizations and their users can access that data and turn it into intelligence that can help the company prosper. Chief financial officers can, for example, use the data to spot trends, examine growth, and monitor progress while credit managers can use it to create a credit scoring model and identify the largest customer credit applications, for example.

Software used for credit management must always have been designed with credit professionals in mind. That means that it should integrate with relevant business systems that the customer has and provide a variety of tools for streamlining workflow.

Moreover, it needs to be able to automate everyday tasks like data entry and processing payments; provide users with the information they need when they need it; and make it easy to share data across business functions. In short, this type of software must allow credit management users to save time on repetitive tasks, enabling them to focus more on customer service and building long-term relationships. It’s a complex challenge and one which a spreadsheet-based approach will always struggle to deliver.

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Accounting software Small business accounting software Credit