What is automated credit control? Many of you might be wondering about this question and why is it beneficial for your business. Customers with a credit history may cause a huge problem for the smooth cash flow of your business in the long run. The shortage of cash flow may drive you out of business due to the delayed payments by the clients.

Therefore, the management of cash and credit is a crucial part of the financial strategy of a company. Many small medium businesses have to devote a lot of time and effort to carrying out smooth credit control management. Still, they fail to meet the criteria and it also increases the opportunity cost of time that could be used in another productive task.

In this blog, we will walk you through the introduction of automated credit control and how it is used in an organization. Moreover, we will discuss why automated credit control is important for your business and what the steps to initiate an automated credit control system is. So, let’s delve deep!

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What is Automated Credit Control?

Automated Credit Control is the automatic debt recovery procedure for the customers. The customers, sometimes, are lazy in paying back their due payments and the management has to take pains to follow up on the customer’s invoices to make the cash flow available in the business.

With automated credit control, the routine tasks of the management are performed automatically by the credit-control software. This cloud-based software helps the financial managers handle the documentation smoothly and make the workflow more efficient and effective by following the credit procedures until the invoice has been paid by the customer.

Why is Automated Credit Control Important?

Automated Credit Control is important for the smooth workflow of your business. It helps you get the debts as soon as possible. Moreover, the business owners can survive and beat the competitive markets by getting the cash flow available to the business.

A free cash flow is important for carrying out the day-to-day operating expenses. Without it, small businesses cannot survive and grow in the market. With the help of the automation of credit, businesses can thrive in the market.

Moreover, the customer relationships are improved for the efficient management of the invoices and the follow-up procedures. With automation, you can turn your customers into loyal and long-term customers as they start relying on the efficient management of the invoices.

Above all, a business reduces the opportunity of managing the lengthy documentation procedure and following the credit of the customers. The saved time and effort can be utilized for another productive task, growing the efficiency of the business ultimately.

What is the Process of the Automated Credit Control?

The automated credit control system consists of the following six steps. This procedure helps boost the cash and efficiency of the credit recovery within the acceptable timeframe. Let’s discuss each of them!

Order Confirmation: With a valid Purchasing Order (Po) number, the order is confirmed automatically on the receipt of the order by the customer.

Pre-Invoice Due Reminder: A reminder is sent automatically to the customer before the due date to the customer.

First Over-Due Reminder: The first reminder is sent to the client after one week to the client. Moreover, a notification is sent to the internal management system of the company that the client has been informed about the due payment.

Second Over-Due Reminder: Still, if the client fails to make a payment, a second reminder is sent to them, with the inclusion of a decision-maker in the email.

Penalties Notice:  After three weeks of the due date, the customer and the customer account manager are informed that the payment will be accompanied by a penalty to the customer.

Account Suspension Notice: Lastly, the account suspension notification is dispatched automatically to the client and the company management. The suspension notification is sent after four weeks and the time of one week is given to the client for the payment of the credit.

Conclusion

Lastly, we can say that automation leads to the availability of cash flow to a business. Cash flow is a major problem for businesses, throwing them out of the market in an instant. However, this dangerous situation can be avoided when a business manager is able to adopt an automated credit control system.

Automation leads to the efficiency of the workflow and the increased productivity of the employees. This saved time and effort is helpful in devoting toward the more productive tasks. So, if your business is suffering from a credit problem and the customers are delaying their payments, you are in need of a credit control system to manage your credits and the cash flow. So, you don’t need to worry anymore about what is credit control as you have found all the answers to your questions and you can decide if you need this automation or not.

If you are looking for a professional accountant and bookkeeper, consult our qualified team at CruseBurke to get the best advisory services for your business. Call us or send us a message!

Disclaimer: All the information provided in this article on What is Automated Credit is general in nature. It does not intend to disregard any of the professional advice.