Swanson & James Ltd

Credit Management

The Credit Management concept focuses upon reducing the balance of outstanding receivables by optimising relations with clients and internal management of debt collection.

Why is there a need for Credit Management?

Over the last few years there has been a gradual shift from classical sales ledger management to high-quality Credit Management. There is a growing realisation that Credit Management can largely contribute to business returns. However implementing efficient Credit Management is often a difficult task due to conflicting interests between sales and cost control divisions. As a result, not all aspects of Credit Management are given the attention they require.

The result can often be an increase in the 60+ days of debtor aged analysis which strains the liquidity position and increases the likely hood of bad debt write offs. Swanson & James Ltd believes the ultimate purpose of Credit Management is to structure an organisations’ policy with regard to its receivables along such lines that the return on the debtor portfolio is maximised. The success of Credit Management therefore involves:

	Lowering the average outstanding credit duration by means of shortening the payment cycle.
	Reducing the balance of receivables, resulting in an improved liquidity position and more favourable cash flow. The profitability of any organisation will rise on account of the fact that outstanding receivables won’t require the same level of financing.

This concept serves as a framework within which all aspects of Credit Management are included. Swanson & James’ practical experience enables Interims to gel this framework around clients core business, infrastructure and culture, complying with any demands from Credit Management.

How can this concept be achieved?

Three specific factors are focused upon in the Credit Management concept:

	Risk Management: Risk-based Credit Management aims to attain a well-balanced acceptance and debt collection policy by means of risk analysis in order to minimise financial exposure. The framework provides certain standards, based on which customers creditworthiness is establisheed.
	Quality Management: Quality Management aims to improve the processes during which unpaid invoices are settled. Elements such as billing, payment demand cycles, personal follow up’s, filing of complaints and reporting systems are viewed within our concept, while quality is realised.
	Time Management: Time Management aims to bring down terms of payments as well as working capital requirements within your company by reducing the settlement period of invoices.