The Best B2B Credit Management Systems
If you run a B2C company, collecting payments is simple. The customer pays; you accept. In B2B, however, there are all sorts of new questions. What if a client needs a line of credit? How do you handle accounts receivable? What about payment collections on delinquent accounts?
B2B credit management systems simplify the entire process for you. In any interaction between companies, the seller and the buyer both seek an effective way to do business. That sometimes means one company extending credit to another.
But what are B2B credit management systems, and what can you do with them? In this post, we’ll tackle what B2B credit management systems can do to change the way you run your business.
What Are B2B Credit Management Systems?
Credit management is an umbrella term for handling loans and payments between companies. With it, you can create company plans for credit card transactions, late payments, customer defaults, and more.
For beginning companies, the idea is simple. All you need is a credit system so you can accept payments. When you’re B2B, the story changes. A B2B credit management system needs to be comprehensive. How will you handle accounts receivable? Cash flow? Payment collections? Customer applications for credit?
Outsourcing these processes to a third party can be expensive. B2B technology can streamline the process of managing credit issues between businesses. Done well, you can use the technology to handle a lot, including:
Handling collections: We saw a 72% year-over-year increase in payment defaults due to COVID. How do you ensure you get paid without feeling like a debt collector? Good credit management software can turn over collection reminders to AI, reducing the need to step in.
Establishing a policy for how you handle credit: Do you extend credit to a company that places a long-term order? Do you have a limit on that policy? Do you refuse to accept it? Put a policy in place. With it, your credit management system can systematically enforce your rules.
Gauging creditworthiness: Using business reports like Experian’s, you can gauge creditworthiness at a moment’s notice. You can even cross-reference your applications with issues like late payments or credit defaults.
Adjusting or extending credit: Is it time to extend credit to a new customer? Restrict credit to an existing client? Connecting your team on the same dashboard means it’s easy to check a client’s history.
Creating a customer portal: If you can provide your customers with an online portal, you’ll accomplish two things. First, you’ll give them an incentive to interact with you, boosting your transparency with their account. Second, you’ll take much of the work out of your own hands.
What Can the Best Credit Management Systems Accomplish?
B2B credit management system providers are meant to make the process as soon as smooth as possible. But let’s get specific. What are some of the payment problems you can solve by having a good B2B credit management system in place? And what sort of problems do you prevent when you get one up and running for your business?
Protecting from fraud: Estimates suggest some 70% of organizations experience check fraud at some point. A B2B credit management system can help you run background checks on business credit to help you assess your risks.
Managing credit lines: Whenever one company extends a credit line, it puts them at some degree of risk. As those credit lines extend, the risk increases. B2B credit management will let you set limits on credit lines from the top-down. This helps establish boundaries between businesses, true. Even more importantly, it creates hard ceilings for managing risk.
Analyzing cash flow: Do you feel like certain clients rarely pay you on time? Do some customers send a payment for invoices later than others? Analyzing your cash flow will help you identify your credit management blind spots.
Building templates: If you want to be able to accept unique payment situations, you’ll need a credit application that other businesses can use. The most efficient way is to build from an existing template. Look for credit management systems that can create customer portals and applications with minimal technical work on your end.
Credit control: What is B2B credit control? It means using software that lets you set the rules for how you manage and accept credit. Let the system make the decision on a decline to help avoid awkward conversations.
How to Handle a B2B Credit Management System the Right Way
Any time you take on a new B2B client and extend credit, there are risks involved. A good B2B credit management system will help mitigate those risks. But it will do more than that.
Tackling everything from an automated credit application system to handling credit checks, the right B2B payments platform will give you the peace of mind that comes with knowing where your payments are coming from. If you’re interested in finding out how, learn more here.