How Group Companies Manage Credit Limits Across Multiple Business Units - Data Interconnect

Many brands under one roof

We have many enterprise clients that have several companies in their group, all under the one stock market ticker symbol. one such client, a leading builders’ merchant, operates in several companies in Europe, and although they run under separate brand names, every lorry in their delivery fleet proudly shows the group that the individual company is part of.

Like many other Data Interconnect clients that use Corrivo, their credit policy covers the net credit for anyone customer across all of their business units.  So how do they keep a handle on credit limits across multiple ledgers?

Central policy, single view

The credit limit is set on the company’s central ERP system, overseen by the group treasury. If a customer has a high unpaid or overdue balance from purchases with one company in the group, it can cause the account to go on stop. When this happens, the same customer is refused credit with other companies in the group until they settle their outstanding invoices. Before implementing Corrivo, this caused some difficulties for the credit team and was especially problematic for the sales team, who could not explain to the customer why their order had been refused.  Their ERP system did not carry detailed information about credit limits or outstanding invoices in a way that it could be made visible to Sales teams or easily visible to credit controllers in any one business.

With Corrivo, all those who needed to be able to understand the exact reasons for accounts going on stop were given a login to Corrivo; and they could read the notes about each account that are held on the system. Visibility across the organisation was half the battle. The other half was won by giving them the ability to send copy invoices to customers when it would help explain.

The devil in the line item detail

Invoices with hundreds of line items with large invoice totals no longer needed to hold up payment. Corrivo allowed customers to part-pay for invoices while one or more disputed line items were investigated. There was no need for a complex system of credit notes to apply across different parts of the organisation. Corrivo made it easy to manage disputes and invoice queries on one a single or multiple line items while the invoice proceeded through the approvals and payment process within the customer’s accounts payable function.

The multi-line item querying feature and the ‘need to know’ permissions-based user management system in Corrivo allow everybody who has visibility of an account within Corrivo to probe the detail of each case and give the customer precise information on what’s happening.

Account-managed credit control

Credit controllers who manage the company’s collections processes for overdue invoices now have a number of accounts that they each take responsibility for. The credit controller handles all the invoices for the customers they are assigned, no matter which brand they were issued from or which ledger the order is assigned to. The credit controllers build up a good knowledge of the customers they manage and strong relationships, which has helped them improve their net promoter scores in their annual customer satisfaction surveys.

The customers prefer a more personal approach from the finance team. The CFO can also see that this makes the credit team smaller and more productive. There is less duplication across different brands. Rather than having credit controllers for each business, with a number of accounts each, they now have fewer credit controllers, with a smaller number of accounts each, that work across multiple ledgers with better results when it comes to keeping their DSO down and their delinquency to a rare, bare minimum.

CFO overview

The central credit team can and CFO can instantly see the important details about accounts receivable performance across the group by looking at the group level dashboards while also being able to click to see the breakdown on a per ledger/ per business basis. Everyone has the view they need, and there’s one more interesting thing to come from this multi-level hierarchy feature: healthy competition. Credit team leaders from each of the brands can see the stats for their peers, and, like two sprinters in a race, they like to work that little bit harder to secure the frontrunner position.  Visibility is accountability – or so they say in MBA circles. We find that visibility in accounts receivable makes accountability achievable.

Download the case study.

David Harris

Author David Harris

David Harris is the Business Development Executive at Data Interconnect. Dave works with companies planning the implementation of Corrivo, the cloud-based credit control software which improves cashflow, minimises aged debt and streamlines processes for finance departments. If you would like to know more, contact Dave on: Davidh@datainterconnect.co.uk

More posts by David Harris

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