Question

Explain the importance of Credit Collection Management to a business entity

Answer 1

Solution:

Meaning of Credit Collection Management:  Credit Collection Management is suite of integrated business application that extends company's account receivable and accounting system to expedite key areas in your buiness. It supports key functional areas:

Credit facilitation,Billing and invoicing,Collection management

Purpose of Credit collection management is to collect the accounts receivable in timely

Importance of Credit Collection Management

Reduce Risk: Credit management can save business entity from aking on excess risk when granting credit, subsequently drastically reducing your risk to bad debt.

Establish term of Sales: While granting the goods on credit there are written policies when account fall due. When customer have to make payment. All these terms mentioned before providing credit so credit collection management plays role in in collecting the credit

Systematize collection procedure: Credit collection management maintain Systematize procedure like:

When to contact a customer

How to contact a customer

When to writte of bad debt

when toplace an account on credit hold

Proactive Chasing: Let your customer know that you are hot in their trail. Being procactive and chasing before the invoice is due means that any issues come to light quicker, and you can resolve them before they delay payment. You Should try to conduct the call as a customer service rather than a collection calls

Collecting Debts: Credit collection management Collects debt from customer by sending emails, notices and check their payments regular basis. Credit collection management also ensure are they making payment timely which credit time is alloted to them.

Conclusion: In the end we can say Credit collection managemnet plays vital role in the business entity . Credit management is importaant toon going credit worthiness and daily functioning of a business.It is possible for a business to successfully make sales but find itself unable to meet its day to day financial obligations because it employs poor credit management practices. Credit management involves several distinct functions that contibute to the financial health of successful business.