How empowering your credit control team could lead to profitable growth in 2024

Shifting the focus from collecting bad debts to holistic revenue lifecycle management can help your business take advantage of more opportunities.

Is expansion on the agenda for your organisation this year? Despite a lacklustre economic outlook – the Reserve Bank has forecast GDP will grow by just 1.75 per cent in the 2024 financial year and business confidence in consumer-facing sectors is at a low ebb – many local businesses are hoping the new year brings with it fresh opportunities for growth.

How best to identify and capitalise on those growth opportunities is the 64-million-dollar question which every leadership team would like answered, stat!

Investing in business development is a popular strategy for enterprises looking to boost their revenue. More account executives on the beat and more resources devoted to advertising and marketing can, and frequently does, lead to increased sales.

But pursuing new customers and larger deals indiscriminately is not without its risks, and never more so than in uncertain economic times, such as those we've experienced since the onset of the Covid crisis four years ago.

Cautionary tales abound of enterprises that have pursued ambitious growth strategies only to come undone when resources are stretched too thin. Cash flow crunches are the most common catalyst. Typically, they're caused by failure to keep monthly expenses and operating capital aligned, credit being extended to new customers who turn out to be slow payers or delinquent debtors, or a business-killing combination of the two. 

Bringing credit control into the conversation

Engaging with their credit control teams from the outset can help businesses avert such crises and ensure they remain on stable ground while they're in expansion mode. 

Historically, these folk haven't always been invited into the strategy and growth conversations. Rather, accounts receivable was viewed as very much backroom business – a discrete transactional component of the finance and admin function.

But that's changing now, and fast. In forward-thinking businesses, accounts receivable (AR) managers are being called on to play a revenue lifecycle management role, one which sees them becoming involved with every aspect of operations, including new business development and the sales process.

And their input is proving invaluable. Who better than them to weigh in on the question of how the appetite for risk and appetite for payment are best balanced? Or which customers are most likely to settle their accounts on the nail, based on their ongoing payment behaviours?

Data-driven insights

That's always assuming they have access to the right tools. We're talking about accounts receivable automation software that makes the collection of payments simpler and faster and enables them to make more informed decisions about who to do business with and how. 

Implemented smartly, it can reduce manual processing, cut payment times and reduce accounts receivable overhead.

While their competitors continue to operate in manual mode, using legacy processes and platforms to track debts and pursue debtors whose accounts are outstanding, businesses which avail themselves of this technology enjoy a powerful additional benefit – up-to-the-minute visibility into the payment status of all their customers, as well as a picture of their payment patterns over time.

This makes it easy for AR leaders to identify those who don't comply with payment terms or need to be repeatedly chased to settle their accounts.

Armed with this knowledge, they can go on the front foot, providing advice to business leaders about how credit policies and bad debt provision can be optimised to support healthy growth.

Towards a stronger future

According to legendary entrepreneur Richard Branson 'to stand still today is to go backwards…and quickly!' Empowering your AR team with automation technology and inviting them into the growth conversation can result in profitable progress. If surviving and thriving is your aim in 2024, they're actions that will serve your enterprise extremely well.