As times have changed and the credit industry has evolved, the role of credit managers has changed, too. Credit managers and business owners adopt different perspectives to ensure their businesses will be able to survive in changing markets. One way to get in on their perspectives is to manage your business’s financial supply chain.
Managing your financial supply chain is more than just knowing you have cash coming in. It’s looking at the big picture of the whole organization to understand the overall flow of cash and how that flow sustains your business over the long term.
This means understanding where cash comes from and looking at where money goes to purchase materials and supplies, pay workers, take and fulfill orders, and deliver your products to customers. It also includes managing reverse cash flow when you accept returns.
Managing financial health throughout the organization
Managing your financial supply chain means knowing what you’re getting and what you’re giving — throughout your whole organization, not just one slice of it. It’s a picture of the company’s overall financial health. Business owners and credit managers often do good work managing the physical supply chain, but the financial supply chain can be neglected. That neglect can threaten company viability.
Managing the financial supply chain means finding balance between day-to-day responsibilities and the high-level tasks required to manage the supply chain. Now you aren’t just working with salespeople to approve credit and collect payments; you’re also working with supply chain managers, demand planners, and production managers to ensure that all parties have the information they need to manage risk throughout the organization.1
Fortunately, many of the tools you use for credit management can also deliver information to help you understand your financial supply chain.
- Start with credit reporting for both customers and suppliers. Make sure you have proper risk management plans in place and be sure your company’s credit management team has a good handle on which customers and suppliers are risky — and which are benefitting your business.
- Consider digging deeper with data contribution programs that can help you make good decisions to not only support your financial supply chain but also build your overall business.
- Make the most of proven portfolio management tools that will reduce risk and show you where good opportunities for growth lie. By growing your business and diversifying, you’ll be able to protect your supply chain.
Managing your financial supply chain can be daunting. Working with a commercial credit management partner who supports you in all areas — beyond just collections — will help ensure you have the information required by all parties in your organization’s financial supply chain.
Together, we will help make the process easier and more understandable so you can make the best decisions for your business and financial supply chain.
1 Blanchard, Dave. 2013. “Managing the Financial Supply Chain.” IndustryWeek, April 8. http://www.industryweek.com/supply-chain/managing-financial-supply-chain?page=1