Credit Function to Strengthen the Commercial Relationship: – Litigation is a common cause of late payment by customers. Their causes are varied: faulty product or installation, shipping error, invoice error (price or erroneous margin rate), etc. These disputes weigh on the cash flow and cause customer dissatisfaction. They are also an opportunity for the credit function (credit manager, recovery manager, recovery manager) to improve the perception that customers can have of him and indirectly, also, the sales force.
Credit Functions in Resolving Disputes
Often the resolution of disputes is entrusted to the sales administration or to a quality department. There are, however, at least three good reasons for the credit service to get involved either regularly or on an ad-hoc basis for a particular customer:
- He is the most motivated to a quick resolution which accelerates the collections and thus improves his personal performance (average time of payment). There is a complementarily between the quality approach focused on customer satisfaction and the prevention of litigation and the credit approach focused on the speed of their resolution (time value of money);
- Becoming involved in the resolution of disputes prevents him from wrongly relaunching the invoices declared in dispute, which is a source of irritation to the client.
- Dispute resolution gives a commercial dimension to the credit function, which renders a service to the customer. The relationship is no longer one-sided; the credit function is no longer content exclusively to ask for a payment. As illustrated by the workflow below, she is involved in getting a quick resolution, even if it means relaunching, this time internally, keeping the client informed of the progress of the dispute, …
- Besides, the satisfaction personal to have rendered a service, the credit function will probably get better payment habits. In exchange for the efforts made by credit, the customer is more likely to respect his commitments later.
Workflow of Dispute Resolution by the Credit Function
- The credit function detects a part of the litigation during the stimulus actions and commits itself to the customer to have it resolved quickly.
- It codifies the invoice in dispute to avoid relaunching it wrongly;
- It identifies the person in charge of resolving it, commits it to act in a short time and motivates it (customer satisfaction and immobilized cash), for example: “the cashing of 100 K € depends on the fact that you help the customer from here to tomorrow “.
- It may keep the client informed on the progress of the dispute if it considers it necessary to strengthen the relationship.
- It ensures the resolution on time and relaunch if necessary internally.
- It reinstates the disputed invoice in the outstanding amount once the dispute is resolved.
The client databases often allow the exploitation of a dispute coding, often 4 to 6 codes referring to the services responsible for resolving them.
- Billing service: waiting for issue of credit,
- Shipping service: waiting for repatriation of material (shipping error, repatriation of defective material);
- Commercial: waiting for a customer agreement, unofficial oral agreement,
- Technical Service: Waiting for Repair Intervention
Such a code makes it possible to:
- Block the automatic edition of the reminder letters. This avoids wrongly restarting,
- Establish dashboards to measure the frequency of disputes by cause, detect areas of non-quality in the company to carry out preventive actions: statistics in number, amount, and delay resolution.
- Facilitate the identification of the actors responsible for the resolution.
- Cycle certifying Credit manager (7326) in six days
- Mutual recovery (2222) in two days
- Most of the risk and credit management (19) in two days.