Who Needs Credit Management Software & Why use it?

Do you need credit management softwareAccording to Dunn & Bradstreet and other credit institutions, accounts receivable is typically the first or second largest asset for most businesses. Accounting and enterprise resources planning (ERP) business applications include accounts receivable modules but most often provide only minimal tools to support collections and dispute management processes.

credit management software

Who needs credit management software
Companies in many different industries struggle to manage outstanding accounts receivable and would benefit from credit management software. The Credit Research Foundation’s National Summary of Domestic Trade Receivables – 2008 Annual Bad-Debt Report estimates that allowances for uncollectable receivables for 2008 were 1.00% of total receivables. This represents an expected, albeit slight increase of 0.50% over 2007 which is likely due to economic conditions. Industries with the highest median percentage of uncollectable receivables included manufacturing, specialty trade contractors, business services, engineering services, and wholesale distributors. Manufacturing seemed to be impacted more than other market segments with 9 of the top 16 highest median values represented by different manufacturing industries.

The CRF report “On Whose Terms?” published indicates that approximately 17% of business customers do not adhere to supplier credit terms. Further, another CRF report showed that most delinquent companies delay or deny payment not due to lack of money or poor cash flow (39%) but actually due to compliance or administrative problems (61%) such as incorrect invoices or receiving the invoice too late to process payment on established credit terms.

These findings show that companies in many different industries can benefit from credit management software  coupled with formalized business procedures to streamline credit and collections activities.

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