In a highly time-critical industry, such as the healthcare services sector, the non-payment of invoices, or default/insolvency claims from your clients can adversely impact the ability to provide effective and efficient customer service. Too often, a business along a supply chain is the last to know that a major trading partner is struggling with financial issues, until it’s too late.
It is crucial, therefore, that businesses in the healthcare service sector implement solid credit management procedures to prevent bad debt, protect your cash flow, and ensure your continued operation for the future.
Credit management issues for healthcare services
Time is of the essence in the healthcare services sector. Delivering punctual and professional service is paramount to the success of any business in this industry, due to the high-stakes nature of the work. You cannot afford to be the last to know that a trading partner or client is facing cash flow issues, making late payments on invoices, or accruing debt at a higher rate.
Say that your business is one that provides essential supplies to a major Aged Care Facility chain in Australia. Due to the size and branding of the chain, you assume that they must be a financially secure and creditworthy partner. You do not do your due diligence, such as performing a business credit check, leaving your business exposed to credit risk, bad debt, and cash flow stagnation – if the worst were to happen.
Unfortunately, the economic impacts of the COVID-19 pandemic hit this Aged Care Facility hard, and it makes a claim of insolvency. You have tens of thousand dollars outstanding in unpaid debt from said partner. You are now competing with a long line of the Facility’s other creditors, so it is unlikely you will reclaim any of the funds. This impact is worsened by the fact that you rely on the speedy turnaround of invoice payments to facilitate the purchasing of new stock for your customers. Your business will bear the brunt of this bad debt, potentially hurting your client relationships and putting you at credit risk too.
This is an often seen credit management issue within the healthcare sector. Now is the time to ask yourself if you have solid credit management procedures in place to protect your bottom line, or if there is room for improvement.
Strengthen credit management procedures for your healthcare business with CreditorWatch
To deliver a consistent level of service, businesses in the healthcare sector must be proactive about their credit management strategy, and monitor the payment behaviour and creditworthiness of debtors. This may offer increased protection from bad debt and stagnant cash flow.
Thankfully, CreditorWatch offers a suite of helpful credit management tools for your healthcare business, designed to help you perform due diligence on customers, suppliers, and all trading partners. These tools can assist in:
Assessing business creditworthiness – First and foremost, it is worth running business credit checks. This is the gold standard in due diligence for new and existing customers. CreditorWatch’s credit reports highlight crucial information to assist you in deciding who to do business with, including a company’s default risk (from A1 to F), number of credit enquiries, court actions, cross directorship information and more.
CreditorWatch’s RiskScore also allows you to assess the likelihood a business may default in the next 12 months, through assigning the entity a graded credit score between 0-850. If a score were to change at any point, you would be immediately notified, allowing you to make immediate financial decisions about that client, such as pushing forward collections or amending non-payment terms.
And speaking of alerts, CreditorWatch’s comprehensive 24/7 monitoring and alert system tracks your customer’s payment activity, and instantly advises you if important information changes. This may include court actions against the company or non-payments to other suppliers. Having up-to-date information on adverse data like this can help paint a picture of the creditworthiness of other businesses. When time is of the essence, knowing key risk factors well ahead of time better protects you from cash flow issues.
Predicting their likelihood of default – Speaking of the risk of customer default, CreditorWatch’s Payment Predictor is another highly effective tool that identifies your customer’s payment history and habits over the last 12 months, compared to others in the industry. This tells you if a customer is starting to show red flags of credit risk, so you have time to act before the worst occurs.
Further, interactive trade platform, DebtorLogic, may also help businesses improve their credit management, as it analyses your entire Aged-Trial Balance (ATB), helping you to see trends in customer, supplier, or trading partner payment, across the market. If the likelihood of an entity paying an outstanding amount fell, and you identified it was at a higher risk of default or insolvency, you can mitigate the poor cash flow risk to your business through adjusting payment terms or proceeding with collections.
Due diligence for major contracts – When it comes to major contracts and meeting your AUSTRAC reporting obligations, performing your due diligence through improved credit management processes is non-negotiable. CreditorWatch can help to streamline your reporting obligations, helping you reduce your exposure to fraud, money laundering, terrorism financing and other criminal activity, through our easy-to-use reports, including:
If a major contract also makes up the bulk of your revenue, you cannot afford to be the last to know about the company’s rising level of financial risk. This is where CreditorWatch’s Financial Risk Assessment system comes in. Go in-depth with our analysis tools around the payment behaviours, financial performance indicators of your major contracts, including cash flow, income statements and more. Leverage our exclusive trade payment data to confidently make decisions and mitigate credit risks before they impact your business.
Streamline customer onboarding – The more accessible your customer data, the easier it is for a business to manage its debtors. Ditch paper applications and time-consuming data entry, and streamline the onboarding of your customers through ApplyEasy. Not only can this system help to eliminate dirty data and make the collections process easier, but it may enhance your customer journey.
Easy collections process – When it comes time to chase late payment of invoices in the healthcare services sector, you want to work smarter, not harder, as time is of the essence for maintaining high-quality customer service. CreditorWatch’s debt collection tools eliminate the labour of chasing outstanding invoices from the workloads of time-poor staff.
Our debtor management solutions and collection tools help you to get paid faster by expediting the debt recovery process, and providing collection letter templates. As a result, those awkward customer conversations are eliminated, and you’re able to maintain strong partner relationships through professional communication. These tools may also be integrated into your existing accounts software, such as Xero or MYOB, allowing for seamless accounts receivables.
Contact our team at CreditorWatch today to learn more about empowering your healthcare services business with exclusive customer, supplier, and trading partner insights, so you may proactively mitigate credit risks, and make informed decisions to protect your cash flow.
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