Accounts receivables, one of a corporation’s largest and most vulnerable assets, is the second most liquid asset after cash, and represents a significant investment in working capital. Uncollectible receivables can place the seller in a vulnerable position as the effect on cash flow, along with the associated balance sheet erosion, can strain the company’s relationship with their financial partner. This might ultimately result in the tightening of credit terms from all of the corporation’s creditors. With deteriorating credit markets and recent high profile insolvencies, the detrimental effect of non-payment from debtors is compounded. There are several ways of mitigating accounts receivable risks, chief among them credit insurance. Often this will be a pre-requisite to obtaining financing from the Bank.

Most insurers underwrite a customer’s own ability to manage credit risk as if they were uninsured, and then only offer coverage for losses above a reasonable level. However, competition is the norm and flexible payment terms are sometimes used as a differentiator to win and retain business. Then companies are confronted with a dilemma: How to tightly monitor customer’s credit while being flexible enough to ensure competitiveness and customer satisfaction?

The credit management process must be flexible enough to not systematically put customers and all their orders on hold. This is particularly true for corporations that are dealing with seasonal activity and whom customers’ orders can easily go over two seasons and break their credit limit if monolithically managed.

Monolithic credit management systems may lead into multiple types of issues:

• Misleading your organization into no picking / packing / shipping legitimate orders,
• Increasing inventory levels,
• Increasing time spent chasing and manually releasing orders illegitimately put on hold,
• Hurting customer satisfaction,
• Preventing you from taking new orders from “on hold” customers.

On the other side, some multi-company organizations are having a hard time to easily check credit position for customers who do business with more than one of their companies, underestimating then their risk with the said customers.

TRIFORCE.NET offers extensive flexibility on credit management setup allowing for the management and control of multiple types of credit, credit insurers, and factors, optionally cross company in a multi-company enterprise. TRIFORCE’s credit system is flexible. It allows you to create multiple parallel credit lines with multiple effective dates, decide whether the customer or the order should be on hold, and define how to handle hold customers or orders. It lets you manage a customer’s credit across all your companies-interactively.

Putting in place the right credit management system will allow you to limit financial risks while increasing customer satisfaction and cash flow, and reducing administrative costs.