Difference between accounts receivable management and credit management

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Sanne de Vries July 9, 2024
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The Difference Between Accounts Receivable Management and Credit Management

Accounts Receivable Management and credit management are often used interchangeably. Credit management is a relatively new and emerging concept, especially known in the United States. It aims to streamline financial handling, including accounts receivable management, and minimize risks in this area. Credit management should optimize, manage, and control a company’s cash flow, both operationally and financially. Credit management overlaps with accounts receivable management and goes a step further in the process of controlling and optimizing cash flows. The main area of credit management encompasses three main areas, namely: accounts receivable management, credit information, and debt collection.

Outsourcing Credit Management

With good credit management: credit risks are detected at an early stage, the accounts receivable balance is reduced, and outstanding claims are often paid earlier. This results in optimal cash flow and liquidity.

With smart cloud software, you can easily achieve good credit management. You can link this software to systems you may already be using. Think of invoicing, accounting, and CRM systems. The software makes it possible to send invoices and reminders automatically and to communicate with your debtors. See also accounts receivable management.

For efficient credit management, it is also important to know the creditworthiness of your debtors. This provides the opportunity to discuss this with your debtor and make arrangements for the invoice to be paid.

Payt’s software also offers the possibility to initiate a debt collection case. This is a method to collect an invoice if your debtor has not paid after the last reminder.

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By Sanne de Vries

Sanne is a business consultant at Payt. She helps companies optimise their financial flows with attention to detail and a deep understanding of business processes.

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