Businesses use credit and collections software to ensure customers pay for the products and services delivered by the company. By recovering the amounts due on time, companies can rely on a consistent influx of money to finance their operations. This type of software is used by accounting teams to identify which invoices are overdue, match invoices and payments, reduce processing errors, and manage collection issues such as bad debt (amounts owed by customers that are unlikely to be paid). Accountants also use credit and collections software to manage customer credits to mitigate the risk of not getting paid. This type of software can also be used by collection agencies that recover outstanding payments on behalf of their customers.
Credit and collections software can be delivered as a standalone product or as part of a financial management suite. Standalone credit and collections tools need to integrate with accounting software and ERP systems or with related point solutions such as AR automation software.
To qualify for inclusion in the Credit and Collections category, a product must:
- Allow users to define customer credit limits and adjust them based on payments history or type of customer
- Match invoice information such as the amount or the due date with payments
- Identify upcoming payments due and notify customers by email, phone, or mail
- Manage overdue payments and apply penalties or overcharges for late payments
- Monitor payments history and identify customers that are more likely to pay late
- Analyze discrepancies between invoices and payments and determine what caused them
