FSCM collection management best practices | Draycir

FSCM, or Financial Supply Chain Management, is the practice of looking at your financial processes as individual elements in one big supply chain. This top-down analysis enables management teams to optimise the financial supply chain, from billings through to collections, credit, and disputes. It should be the goal of all FSCM professionals to improve the efficiency of the supply chain and increase profits in the process, which is why FSCM collection management best practices are so important.

Following best practices enables management teams to simplify the collections aspect of FSCM. Get paid faster, track your outstanding invoices clearly and simply, and reduce your administrative workload by following our FSCM collection management best practices.

What is FSCM collections?

The collections aspect of FSCM supports active collections management in accounts receivables. Collections management systems must incorporate various data points from the collections process, including:

• A summary of the invoices that have been sent out

• Payment history of invoices paid

• Records of open and closed dispute cases

• Promise-to-pay data

• Customer contact details

• Records of correspondence regarding invoices

It’s important that FSCM teams ensure that each individual aspect of the collections process can be accessed easily at any point during collections, to ensure efficiency and enable staff to keep all records up-to-date when changes occur, for example when an invoice is paid or when a debtor is contacted.

FSCM collection management best practices

FSCM collection management best practices can be implemented by FSCM professionals to improve operational efficiency and achieve consistency when carrying out collections processes across an organisation.

1. Customer segmentation

Collections management best practice should always entail some degree of customer segmentation. Customers can be segmented by size, payment behaviour, risk category, and sales volume. By segmenting different customer groups in this way, it’s easier to track and manage which kinds of collections are going smoothly and which may need assessing; as well as streamlining operations where only certain groups of customers may need action taken at any one time.

2. Automated correspondence

Various different types of automated messages and responses should be written and programmed in order to reduce the amount of time that collections staff spend manually contacting customers. These can include gentle reminders, past-due notices, and demand letters, each of which can be automatically sent at set periods after a payment is due. Not only does automated correspondence save time, it also ensures consistency of tone and strategy across all clients.

3. Invoice-level collections

Invoice-level collections strategies should be implemented when dealing with large customers. Often, issues with larger companies not paying their invoices are related to issues with the invoice itself rather than cash flow. Invoice-level collections best practice includes performing analysis on which issues are causing disputes or non-payments, such as pricing errors and shortages, and creating a dispute case for problem invoices. This can help collections staff to track problem invoices and predict future problems before they occur.

4. Track client history for regular late payments

It’s important to keep track of the historical behaviour of particular clients in order to identify those customers who are always paying late. Clear and easy-to-navigate records should make it simple to identify which customers have a pattern of not paying invoices on time, and in these cases, it can be useful to introduce extra measures to ensure that future invoices are paid on time. Whether this means arranging a meeting with the customer to discuss late payments to tailored correspondence or even a cap on the amount of work that will be completed before an invoice is paid, different strategies can be implemented to discourage regular late payments.

5. Reviewing outstanding invoices for errors

When an invoice hasn’t been paid, it’s easy to assume that the error is on the client’s side. However, this is not always the case. Sometimes an invoice may be unpaid because the invoiced amount doesn’t match the completed work, or in some cases an invoice may have been paid but the cheque hasn’t been deposited. It’s important to spend time regularly assessing unpaid invoices for errors like this and, where possible, automating some of these checks.

Collections management made simple with Credit Hound

We offer streamlined collections management solutions in the form of Credit Hound, our favourite advanced credit control software that can enable collections teams to automate many of the most time-consuming day-to-day collections tasks, simplifying the process of identifying exactly how much you’re owed and which customers you need to chase up.

Credit Hound offers:

• Automated task management to save you time and money

• Pro-active credit control that doesn’t let any debts get forgotten

• Tech that can help you to identify cash that can be used by your business today

• A comprehensive reporting system that highlights debtors and keeps records clear

• A fast return on your investment by offering daily savings

Credit Hound integrates with many of the most popular ERP and accounting systems, including Sage, and it’s a simple and effective way to implement many of the FSCM collection management best practices mentioned above. The easy-to-use Credit Hound interface enables you to automate correspondence with clients, track and report on collections, and use this data to improve operational efficiency in the future.

You can read more about how Credit Hound software can help you here .

Get in touch

If you’re looking for practical solutions that can help your business to reduce costs, optimise efficiency, and improve the quality of your service for customers and staff, contact us today at Draycir. We offer a huge range of IT solutions for businesses that can help you to streamline collections management and follow our FSCM collection management best practices with ease.

Get in touch today and call us on 0116 255 3010.