Risk Of Not Using Credit Management Software
CREDIT MANAGEMENT SOFTWARE APPLICATIONS
Negative financial impacts can arise for businesses that fail to embrace credit management software and the order-to-cash (O2C) cycle. An O2C cycle encompasses the overall process of running orders from vendors to customers, all of whom need to pay invoices and receive payments to sustain the business. It involves more than just issuing an invoice and waiting for the customer to pay.
When it comes to the risks of not using credit management software, it can be summed up in three distinct words: time, cost, and accuracy. Without proper software in place, these three things will be significantly impacted, leading to decrease in profit margins and customer satisfaction.
Time is of the essence when it comes to making sure invoices are sent out promptly and payments are received quickly. If business is not utilizing credit management software to manage the O2C cycle, it can take significantly longer to complete the process when compared to business that is leveraging the software.
Cost can become major issue if business is not taking advantage of software. When manual methods become too cumbersome, company has to hire more staff to ensure the process is completed in timely manner. This can quickly lead to an increase in overhead costs and decrease in profits. Furthermore, with manual methods, there is greater possibility of errors in the invoice/payment process, which could lead to costly disputes and possible penalties for late payments.
Accuracy is another important factor that can be negatively impacted without credit management software. Utilizing software ensures that all invoices are sent to the correct customers and payments are received on time. It also helps to ensure invoices are sent out with correct/complete information. This is vital to avoid disputes, ensure prompt payments and ensure compliance with governmental regulations.
By taking advantage of credit management software, businesses are able to significantly reduce the time it takes to manage the O2C cycle, reduce costs associated with manual methods, and ensure accuracy of invoices and payments. This is especially important for larger businesses dealing with more customers and high volumes of invoices and payments.
In conclusion, C-Suite executives should be aware of the risks associated with not leveraging credit management software in the O2C cycle. As demonstrated, there are several potential impacts to consider such as time, cost, and accuracy. By using credit management software, businesses are able to reduce the time associated with invoicing/payments, reduce overhead costs, and ensure accuracy of invoices/payments.
