What is credit management?

Financial terms such as credit management, accounts receivable management and creditors can be confusing. They are related, but how exactly do they fit together? Tom already explained it in this video. Here is a quick overview of the most frequently asked questions.

Credit management is about having insight into sending, following up on and collecting invoices. Many business owners also know credit management as accounts receivable management. But direct debit, customer credit information and maintaining or improving cash flow can also fall under it.

An important part of credit management is therefore managing your accounts receivable well. A debtor is a customer or supplier who owes you an outstanding amount. At that moment, you are the creditor. The debtor can be an individual, a company or a government body, for example.

When you send an invoice to your customer as a business owner, you naturally hope the customer pays quickly. In practice, this is not always the case. Customers often receive multiple invoices from various suppliers, so your invoice can be overlooked.

For good credit management, it is a good idea to give your debtors a code so you can easily tell them apart. Logical numbering reduces the risk of administrative errors. You can of course combine this with invoice numbers. But there are more things that help you keep your accounts receivable in order.

Days Sales Outstanding (DSO) is a commonly used term in credit management. It is the average time customers take to pay, in other words: how long does it take for an invoice to be paid? DSO varies depending on the payment term you use.

Ideally, payment comes in before the payment term stated on the invoice. In most cases, however, it takes just as long or even longer. For healthy cash flow in your business, you want the DSO to be as short as possible, because the sooner the money is in your business account.

Shortening DSO is therefore an important task in credit management. An automated credit management system can help. For example, invoices with a payment link are paid faster than invoices without one.

The entire process around transactions can be automated. This helps business owners and finance departments keep control of outstanding invoices, especially at 100 invoices per month or more. You can also combine or integrate the Buckaroo credit management solution with other software.

What does this credit management software do? Among other things, it can:

Buckaroo offers various solutions for accounts receivable management and sending invoices. A logical choice if you already use an external provider for payment methods such as iDEAL, PayPal, Bancontact and direct debit (for an online store, for example).

Do you process invoices in accounting software or an invoicing system? And do you only need help sending a payment link or payment reminder? Buckaroo can also integrate the credit management solution with other software.