Long & Short Term Credit Management

Managing customer credit risk and debt recovery requires both tactical short-term solutions and strategic long-term planning. 

EFF offers comprehensive credit management services covering immediate needs and sustainable financial stability. 

With over 15 years of expertise, our tailored strategies drive results.

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Rapid Credit Management for Short-Term Success

When cash flow issues require quick resolution, EFF provides:

  • Expedited credit risk assessment of new customers
  • Automated reminders and collections to receive payments faster
  • Short-term solutions to mitigate credit risk
  • Accelerated debt recovery services globally
  • Fast implementation of credit management processes
  • Reporting and analytics focused on improving immediate cash flow

Our priority is generating quick results to resolve pressing credit control and collections issues impacting day-to-day operations.

 

Table of Contents

Strategic Credit Management for Long-Term Stability

The Risks of Poor Credit Management

Neglecting credit management and debt recovery can severely impact an organisation’s financial health and stability over both the short and long-term. 

Common consequences of poor credit control practices include increased late payments from customers, higher delinquency rates leading to unrecoverable debt and write-offs, and revenue losses from offering lenient terms or excessive credit to risky customers.

In the short run, lacking credit management procedures can starve a business of the cash flow needed for daily operations and meeting immediate obligations like payroll and supplier invoices. 

Over the longer term, consistently late customer payments and write-offs erode profitability. A company may resort to risky financial manoeuvres like taking on high interest loans to offset the working capital deficit. 

The business loses out on opportunities for growth and innovation due to the time and resources spent chasing payments owed. Their strained cash flow makes it difficult to invest strategically for the future.

 

Experienced Guidance Tailored to Your Needs

EFF combines dedicated account management with powerful technology:

  • Local presence and expertise in each region
  • Consulting to set optimal risk/return tradeoffs
  • Flexible full or partial outsourcing engagement
  • Integration with your accounting platform via APIs
  • Automation for efficiency coupled with human insight

Our experts become an extension of your team to meet both immediate and long-term credit management goals.

 

Credit Management Regulatory Compliance

Effective credit management processes are crucial for remaining compliant with an array of legal and regulatory requirements. For example, debt collection activities are subject to various consumer protection laws that dictate how to follow up on late payments legally and without undue harassment of customers. Data privacy regulations also come into play regarding use of credit reports and protecting sensitive customer financial information.

Anti-money laundering and knowing your customer regulations require businesses to properly vet clients before extending credit. Ongoing credit monitoring helps alert companies to any suspicious transaction activity. Adhering to accounting standards and practices when writing off irrecoverable debts is also an element of compliance. 

EFF keeps up to date on all relevant regulations globally and ensures credit management programs meet requisite standards. This prevents potentially significant fines, lawsuits, and reputational damage from non-compliance.

 

Frequently Asked Questions about Long and Short Term Credit

Short-term credit is extended for a period of less than 12 months, often 30, 60 or 90 days. It addresses immediate working capital needs. Long-term credit exceeds 12 months, allowing customers to finance purchases over years rather than months.

Common short-term credit examples include trade credit like net 30 terms, revolving credit lines, inventory financing, and short-term business loans or notes with maturity dates under one year. These enable flexibility in managing near-term cash flows.

Long-term credit instruments include term loans, bonds, mortgages, and leases exceeding 12 months. This type of financing provides capital for long-term investments and growth strategies.

The five C’s of credit evaluation are capacity, capital, conditions, collateral, and character. Assessing these factors helps determine a customer’s ability and willingness to pay obligations as expected.

Yes, HMRC has the authority to check business bank accounts when investigating potential cases of suspected VAT fraud. This allows them to identify discrepancies between declared VAT returns and actual amounts deposited from sales transactions. Maintaining accurate books and records provides audit protection.