CRM software is, surprisingly, one of the more common tools used for debt collection. However, this attempt to use their existing CRM software to manage the credit and collections process rarely ever ends with success. This is because many have a hard time seeing the difference between CRM and debt collection software because they share some very similar qualities, but it is very important to understand the differences between these two systems and how they will affect your cash flow and overall profitability.
There are two critical differences between CRM and debt collection software:
1. This may seem obvious but, CRM is designed for sales, accounts receivable management software is designed for credit and collections.
2. CRM allows you to document what you’ve done. Accounts receivable management software tells you what you need to do and has built in workflow to help you do it better and faster.
Paystream Advisors expanded on this second major difference between CRM and collections software:
“The key innovation of business-to-business (B2B) collection software is workflow automation. A strategy engine integrates the AR data with a tickler system and activity logs, so account status and previous actions taken can drive the next logical collection step. Moreover, the software can prioritize collection activities, ensuring a consistent and efficient process. Integrated communication tools – faxing capabilities, e-mail, invoice reprinting, other forms of data export, and auto-dialers – further enhance productivity.”
So with such important and obvious differences, why do people think that CRM is a viable tool for the management of accounts receivable?
Because the process of collecting past due invoices is similar, in some respects, to the sales process. For instance, in each process you maintain a list of customers and contacts, record interactions with them, and schedule follow up calls. Your CRM can do all of that in its sleep, right? So you must be wondering, what’s the big deal? The big deal is how these systems are used and the functionality your end-users need for optimized credit collections.
The individuals responsible for performing collections are generally not sales people, so in order for them to use CRM to manage accounts receivable you would need to purchase additional CRM user licenses as well as add and maintain collections contacts into the CRM system, because collections contacts are usually different than the sales contacts. That doesn’t seem so bad, but the sales CRM database will contain many prospects and even some customers who have not purchased anything on credit. This will just clutter the system for credit specialists and make their jobs more time consuming than they already are when they have to sift through all of that superfluous information.
However most importantly, the differences lie in what CRM can’t do and what debt collection software can do. CRM software can’t tell you who you need to call based on aging buckets in order to collect most effectively or automatically escalate an account due to an invoice dispute. It also can’t accept payments from customers in a secure payment portal and then log that against the account. These main functions of debt collection software help you in your collections process to become more efficient and collect more quickly, while CRM software is unable to help in these areas.
CRM software can be adapted to address some of these above points through customization or purchase of add-on products which are available for certain CRM software products. However, that adds cost for creating and supporting the customizations and extends the implementation process. Further, in some systems this can create version lock preventing access to new versions of the CRM software due to heavy customization. All in all, using the right tool for the job is just easier, less expensive, and will lead to much more successful credit collections.
To learn more about debt collection software, visit our resource center where you can watch videos, read white papers, access customer success stories, and much more![vc_row][vc_column][vc_cta h2=”ACCOUNTS RECEIVABLE SOFTWARE BUYER’S GUIDE” txt_align=”center” color=”turquoise” el_width=”xs” add_icon=”bottom” i_type=”entypo” i_icon_entypo=”entypo-icon entypo-icon-doc-text” i_color=”grey” i_background_style=”rounded” i_background_color=”turquoise” i_size=”xl” i_on_border=”true” i_link=”url:https%3A%2F%2Fanytimecollect.com%2Faccounts-receivable-software-buyers-guide%2F|||”]
What tools are the best for managing accounts receivable and debt collection?
We list them all in this guide.