What is credit management?

What is credit management?

Credit management is a relatively new concept and aims to streamline the finance department, including receivables management, and minimise risks in this area. Credit management should optimise, manage and control a company's cash flow, both operationally and financially. This is extremely important as it serves to prevent late or non-payment. Effective credit management strengthens your company's financial or liquidity position, making it an essential part of your business.

Credit management can be divided into four components: credit analysis and risk management, cash collection, dispute management, and accounts receivable management. All components aim to ensure that customers pay their invoices within set payment terms. Effective credit management contributes directly to your company's profits by reducing late or non-payments, improving cash flow, lowering your DSO and improving your customers' payment behaviour.