An overwhelming amount of small businesses are relying on their ERP system for credit and collections management. Although ERP systems can give great insight to other areas of the business, they really aren’t made for powerful collections and their financial reports are lacking. Majority of those tasks are then forced to be done manually, which is a huge waste of time. In a study we conducted last year, we discovered that almost half of all respondents were using their ERP system for credit and collections management. Here we will discuss why this is fraught with issues and why you should adopt using an accounts receivable software.
One of the most common reasons that customers won’t pay is due to an invoice dispute. They come up all of the time, however, ERP systems just aren’t made to handle the workflow necessary to resolve these issues. Each dispute may also require a different process towards resolution and then you are stuck manually figuring out where to prioritize actions and who to call. Using a credit and collections management software that allows you to attach important documents, prioritize actions and document customer interactions makes dealing with dispute much faster and easier.
Yes, credit and collections management modules are available for ERP systems. However, often times you are required to purchase and implement other dependent modules in order to gain access to the credit and collections management functions. This can incur costly fees such as added licenses, service and support. By finding a credit and collections management software that integrates to your ERP system, you can avoid all of this.
The reporting functions that exist within ERP systems for financials are limited and don’t give many options to work with and customize. To gain these types of functions, IT will be taken away from other critical tasks. Using a credit and collections management software, you will be able to create reports for anything from customer interactions over the last month to unpaid invoices by X number of day, and anything in between.
Often times, credit and collections management teams are found to jump between programs, spreadsheets and emails just to find the information they are looking for. On top of that, ERP systems lack real time data, which means you must manually enter in information. These types of tasks leave yourself open to data entry errors, miscommunication and mistakes. A credit and collections management software automates all of these manual tasks for you.
As all of these points showed, ERP is not the most efficient system for tracking financials and collections. These long process can be eliminates and the gaps can be filled by using a credit and collections management software. Research shows that most collections process in an ERP system can take anywhere from 25 minutes to 40 minutes. With credit and collections management software, that time is decreased to 15 minutes.
Clearly, using an ERP system to manage your invoices, financials and collections activities simply isn’t cutting it. And yet, majority of small business owners are using it. By simply adopting a credit and collections software application, more small business owners could increase their cash flow and decrease their average days late.