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What is credit control software?

Credit control software is a class of software that exists with the goals of helping businesses save time and boost cashflow in carrying out credit control. It provides tools to help businesses effectively automate chasing their customers to pay their invoices by email. It also provides businesses with insights to help them better decide which customers to grant credit to and how best to chase up customers to pay their invoices.

How does the automation in credit control software operate?

Credit control software is not invoicing software. You will integrate your credit control software with your accounting system or invoicing platform so that it has details of your customers and sales invoices. You will then setup different email templates that can be sent to your customers regarding outstanding sales invoices. These templates will have placeholders for the pieces of information that will always be customer and invoice specific (e.g. invoice number, customer contact first name). You will set a schedule of which template you want sent out at which point by reference to invoice due date. At each of those points, your credit control software will check with your accounting system or invoicing platform that the relevant invoice remains unpaid. If so, it will populate the chosen template with the relevant customer and invoice specific information. It will then send the completed email to the relevant customer contact.

Automation that works

The idea of automating the email chasing part of your credit control process is seductive. Polite persistence pays when it comes to chasing customers to pay their invoices. You may be thinking: "this is great. I'll setup this automated functionality and get all the benefits of polite persistent chasing whilst saving the time we used to have to spend as a finance team chasing manually". There is however a "but".

In order for that polite persistent chasing to be effective, it has to feel human. Effective credit control is rooted in the relationship between you and your customer. Chasing emails that are clearly automated are a false economy. They are clearly not personal emails from you or your team. They do not build upon that customer relationship and can easily be ignored. They are ineffective in getting your invoices paid. They are polite persistence that doesn't pay.

It is imperative that your credit control software gives you the ability to automate the chasing process in the way that you would do it were you doing it manually. 

Key components of this automated humanity are:

  • That the templates and schedules you setup are not one size fits all. You have the ability to tailor them according to the relevant characteristics of that customer (e.g. closeness of the relationship, payment habits)
  • They reflect your regular email address and email signature in being sent
  • Where that customer has more than one outstanding invoice, the automated emails can automatically group the chasing of those invoices together in one email in the way that you would do manually
  • You can set the emails to be sent only on the days of the week and at the specific times that you would send them manually. This way you can avoid the clear hallmark of automation that comes from sending them outside of working hours. You also avoid emails being sent about invoices that have already been paid but that you haven't yet had a chance to reconcile accordingly.

What are credit control insights?

Your credit control software acts as a communication hub for all of your credit control records. It provides you with a record of all of the chasing emails sent in relation to different invoices. It also provides a log of all replies that flowed back and forth between you and your customer in response to those chasing emails. Finally, there is the ability to add notes of any other credit control interactions with the customer (e.g. chasing phone calls). Your finance team, and any other team members who need it, will be able to access the complete credit control conversation with the customer within your credit control software. No more uncertainty as to what has taken place and no more having to root through inbox or sent items to piece the picture back together.

Alongside this historic insight, your credit control software will provide you with information that makes your credit control smarter and more effective. It will present you with customer payment habits and trends so that you can know empirically who your good and bad paying customers are and you can tailor your chasing and grant of credit accordingly. Your credit control software will suggest who the best person is to contact at your customer. It will also suggest the best time to contact them. All by way of giving your invoice the best chance of being paid on time.

Who uses credit control software?

Credit control software requires time to setup and administer. If you are a small owner managed business, then credit control will just be about doing enough to get your invoices paid. And making sure that there is sufficient cash in your bank at the end of the month to pay your bills. The increasing array of basic, clearly automated, reminder functionality available within cloud accounting systems will likely be sufficient for your needs.

Credit control software is for businesses who recognise the value of good credit control. They want to maximise the time efficiency of their finance teams by automating the email chasing part of their credit control process. At the same time as preserving the human touch that makes that chasing effective so that they can achieve the best debtor day and cash collection performance. They recognise that when it comes to credit control, they are competing with other suppliers to that customer to get their invoices to the front of the queue. They want the insights provided by credit control software to help them do that. A good rule of thumb is if you as a company have at least one person on your team for whom credit control is part of their job description, you should be looking to invest in credit control software to help them do that job most effectively.