Financial institutions use technology and credit scoring strategies to manage lending activity. Now businesses lending to their customers by extending trade credit are learning the value of adopting credit monitoring solutions as an integral part of account receivable best practices.

The credit health of customers is top of mind for many CFOs today. Slow pays, delinquencies and credit losses have a major impact on companies of all sizes but are particularly harmful to small businesses that, in the past, have not had affordable credit scoring and monitoring solutions available.

As businesses emerge from the recession and sales pick up, the best practice is to determine those buyers with a higher probability of payment before extending credit. Like banks, businesses need processes in place to evaluate and assess the credit risk of their customers, and to extend more credit on better terms to support higher sales to those with the least risk and to limit trade credit or use alternative payment strategies for more risky customers.

Scoring solutions help business adapt to a changing economy. A lot can happen, even in a few short months. In these uncertain economic times, some customers will improve while others may decline.  Using software-as-a-service, web-based, AR Best Practice credit scoring technology to segment poor from better credit buyers can produce a competitive advantage.

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Credit Scoring, not just for banks

Poor management of accounts receivables is the enemy of cash flow. For small businesses today, 30-day terms all too often extend to 60, 90 and 120 days before payment is made.

CPAs can help their small business clients better manage cash flow by proactively talking about their payment policies and procedures. Now is the time to help your clients set a 2010 goal of implementing payment acceptance best practices. Why?  Because by implementing sound accounts receivable policies with the objective of lowering working capital, businesses will achieve an operational advantage over their competitors.

Business is, ultimately, about getting paid.  Businesses need to have enough working capital to fund their operations while they wait to get paid.  If a company can improve its processes and get paid a little earlier, this means the company would need less working capital to fund its operations. Companies that use payment technology to run more efficiently require lower working capital.

And a lower working capital requirement in turn reduces the costs of financing working capital. Financing working capital can come from many sources (some more expensive than others). With the tight credit market small businesses are currently experiencing, implementing AR best practices can reduce credit risk, automate manual paper-driven processes and provide skilled invoice follow up support – which combine to produce a more efficient payment cycle.

At VantageB2B.com, our analyst work with small businesses and their CPAs as payment advisors, delivering professional payment resources combining AR best practices with Level 3 commercial card payment acceptance to lower costs, increase productivity and enhance security.

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CPAs play a key role in helping small businesses implement payment best practices

Vantage has launched a new web site at http://vantageb2b.com focused on addressing the specific payment needs of small and mid-sized (SMB) business-to-business (B2B) and business-to-government (B2G) enterprises. VantageB2B.com offers payment acceptance policies, strategies and best practices to lower cost, increase productivity and enhance security.

Today’s most successful SMB are using a mix of technology and best practices to effectively manage their accounts receivables to increase cash flow and working capital. Managing credit risks, using lockbox services to automate paper-based processes and following AR best practice invoice tracking and follow up are being viewed as smart strategic decisions, giving SMB a competitive advantage once reserved only for big business.

Likewise, companies are finding that not every buyer or every invoice is best suited for trade credit. Commercial credit cards are being used to replace inefficient and expensive paper purchase order processes by businesses, corporations and government agencies. Accepting Corporate, Business, Purchasing and GSA Purchasing cards are an important component of a company’s payment policies. Establishing a merchant account to accept commercial card payments is different that setting up a retail-style business to consumer (B2C) merchant account. This has resulted in SMB paying expensive non-qualified surcharges. VantageB2B.com helps SMB understand card payment best practices including the cost saving of moving to a Level 3 merchant services provider.

Marrying card payment and AR trade credit best practices, Vantage delivers a single source, comprehensive approach to B2B payments. To help meet client demand, we have openings for Commercial Payment Analyst with B2B consulting experience. We will be holding weekly training seminars every Tuesday at 2 pm EST. Please visit http://vantageb2b.com/now-hiring for more on this career opportunity.

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Vantage launches new site dedicated to B2B payments