{"id":3672,"date":"2024-07-09T15:23:11","date_gmt":"2024-07-09T15:23:11","guid":{"rendered":"https:\/\/aividens.com\/?p=3672"},"modified":"2026-04-02T08:04:56","modified_gmt":"2026-04-02T07:04:56","slug":"business-case-credit-management","status":"publish","type":"post","link":"https:\/\/aividens.com\/nl\/business-case-credit-management\/","title":{"rendered":"Building a business case for a Credit Management 2.0: Tips and Reflections"},"content":{"rendered":"\n<figure class=\"wp-block-image aligncenter size-full is-resized\"><img fetchpriority=\"high\" decoding=\"async\" width=\"512\" height=\"287\" src=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Credit-Management.jpg\" alt=\"\" class=\"wp-image-3674\" style=\"width:734px;height:auto\" title=\"\" srcset=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Credit-Management.jpg 512w, https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Credit-Management-300x168.jpg 300w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><\/figure>\n\n\n\n<div style=\"height:26px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ul class=\"wp-block-list\">\n<li>In the previous blog, \u2018Isn\u2019t it time to optimize your working capital with AI-powered actionable insights?\u2019, we discussed the macro- and micro- economical causes of late payments.<\/li>\n\n\n\n<li>We also discussed the potential consequences and business impact of late payments as well as AiVidens&#8217; vision and approach to fully <strong>anticipate<\/strong> this payment behavior before it becomes reality.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">What\u2019s in it for me?<\/mark><\/h2>\n\n\n\n<p>As a Finance Manager, you may be wondering: <\/p>\n\n\n\n<p><em>\u201cWhat benefits could I achieve from improving some Key Performance Indicators to defend my business case internally?\u201d<\/em><\/p>\n\n\n\n<p><em>\u201cAt the end, we all want to improve and enrich our current (mostly expensive) ERP investments and\/or traditional Collection tools with additional AI-driven insights as ammunition to improve our KPIs and build our business case.\u201d<\/em><\/p>\n\n\n\n<p>This blog post should support companies like yours in answering this question.<br>We have developed <strong>a model<\/strong> that calculates the potential financial returns and efficiency gains if potential <strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">payment problems<\/mark><\/strong> can be <mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\"><strong>proactively anticipated<\/strong> <\/mark>rather than trying to remediate them after the fact.<\/p>\n\n\n\n<p>Before proceeding to the business case and starting our simulation, we must quickly assess the liquidity health AS-IS. For this purpose, we look at the parameters available in your company\u2019s balance sheet and P&amp;L.<\/p>\n\n\n\n<p>Without going into all the details and calculations, we will highlight and describe a few key points.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">A \u201cAS-IS\u201d Context<\/mark><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full is-resized\"><img decoding=\"async\" width=\"512\" height=\"384\" src=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Aividens-Conference.jpg\" alt=\"\" class=\"wp-image-3677\" style=\"width:768px;height:auto\" title=\"\" srcset=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Aividens-Conference.jpg 512w, https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Aividens-Conference-300x225.jpg 300w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><\/figure>\n\n\n\n<p>First, we collect and look at the following important parameters and analyze their evolution:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\"><strong>Acid Ratio<\/strong>:<\/mark> The acid-test ratio, also known as the <strong>quick ratio<\/strong>, is a financial metric used <strong>to evaluate a company&#8217;s short-term liquidity<\/strong>. It measures a company&#8217;s ability to pay off its current liabilities without relying on the sale of inventory.<\/li>\n<\/ul>\n\n\n\n<p>\u2192 A ratio below 1 suggests that the company may struggle to meet its short-term obligations, signaling potential liquidity issues.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">Working Capital<\/mark><\/strong>: Working capital is a financial metric that represents the difference between a company&#8217;s current assets and current liabilities. It is a measure of a <strong>company&#8217;s short-term financial health <\/strong>and its ability to cover its short-term obligations.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">DSO (Days Sales Outstanding)<\/mark><\/strong>: It is a financial metric used to measure the average number of days it takes a company to collect payment after a sale has been made. DSO is a critical indicator of a company&#8217;s efficiency in managing its <strong>accounts receivable and the effectiveness of its credit and collection processes.<\/strong><\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\"><strong>Number of Months<\/strong> <\/mark>where your Working Capital can fully cover the costs <strong>(to operate and run your daily business).<\/strong><\/li>\n<\/ul>\n\n\n\n<p>As soon as we have a clear picture of the current situation, we can start to look at some <strong>(simulated) scenarios<\/strong> where we want to understand the impact of potential improvements.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">Business Model Drivers<\/mark><\/h2>\n\n\n\n<p>Assume that we can bring down the number of DSO by 5 days thanks to the deployment of an AI-Powered Receivables Management Platform where you always start from on-time Insights (typically updated a few times a day) instead of solely relying on automating transactions often based on incomplete or obsolete payment and risk information.<\/p>\n\n\n\n<p>\u2192 The outcome our Model will provide major financial gains described below. These financial gains will support the Credit Manager to defend his\/her investment in making the credit management <strong>not only more efficient but also more effective.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">Financial Gains following the model calculations<\/mark><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full is-resized\"><img decoding=\"async\" width=\"512\" height=\"287\" src=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Financial-Gains-model.jpg\" alt=\"\" class=\"wp-image-3680\" style=\"width:734px\" title=\"\" srcset=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Financial-Gains-model.jpg 512w, https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/Financial-Gains-model-300x168.jpg 300w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><\/figure>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">Gain in Cash:<\/mark><\/strong> Here, we calculate the<strong> additional cash amount the DSO decrease<\/strong> (in our case 5 Days) will generate on your account over the coming years.<br><br>We can include \u2013 if relevant \u2013 also a <strong>revenue growth<\/strong> rate so that we have a more accurate representation of the gain in cash over several years in function of the foreseen growth rate. <br><br>With this Gain in Cash there are 2 scenarios possible :<br>\n<ul class=\"arrows wp-block-list\">\n<li>The Credit Manager can decide to put the cash in the bank &gt; Interest Gain. Typically, at a rate of 3.40% today (status June 2024).<\/li>\n\n\n\n<li>The Credit Manager can decide to re-invest the cash (e.g., in innovation, sustainability, R&amp;D, \u2026) &gt; Gain on the Opportunity Investment (or Avoidance of Opportunity Cost). Typically at a rate of 15%.<br><br>The Finance department will finally decide about the destination of the additional cash raised thanks to this more efficient and effective cash collection process based on AI-driven Insights.<br><br><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">Gain in Operational Efficiency of the Cash Collection Team: <\/mark><\/strong>In addition to the generated cash and the respective returns, we also calculate the operational efficiency gains thanks to the generated AI-Powered Insights.<br><br>Indeed, the Collection team will receive a Smart List (Agenda) with the prioritization of customers for each member of the team to be contacted each day and\/or cases to be followed up with urgency.<br><br>These efficiency gains can only be generated thanks to the provision of continuously updated Smart Lists (coming out of the non-stop segmentations of customers with their respective payment profiles and risk type).<br><br>On average, the Operational Efficiency return amounts to 20% and is typically a salary cost that can be used for different purposes.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">Results (per year) Calculations<\/mark><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/AiVidens_calculation_l1200px-1-1024x576.jpg\" alt=\"\" class=\"wp-image-3742\" title=\"\" srcset=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/AiVidens_calculation_l1200px-1-1024x576.jpg 1024w, https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/AiVidens_calculation_l1200px-1-300x169.jpg 300w, https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/AiVidens_calculation_l1200px-1-768x432.jpg 768w, https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/AiVidens_calculation_l1200px-1.jpg 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">Conclusion<\/mark><\/h2>\n\n\n\n<p>We have provided some insights on how Finance departments could build a business case to defend a future investment in an innovative SaaS AI platform to cope with the increasing payment challenges in the marketplace.<\/p>\n\n\n\n<p>Our model should give the Finance Department the necessary ammunition to defend his\/her planned investment and achieve relevant investment prioritization across the company. This finance project can perfectly run alongside ongoing or planned IT initiatives.<\/p>\n\n\n\n<p class=\"has-text-align-center has-black-color has-text-color has-background has-link-color wp-elements-e74b511670cf1d06dac7f8bf629c29b5\" style=\"background-color:#ec257e\"><mark style=\"background-color:#ec257e\" class=\"has-inline-color has-black-color\"><em>We provide a concrete AI use case potentially resulting in a positive business case that can work with minimal IT involvement.<br>Nor does your project and business case have to be part of or embedded into a long-term resource-intensive IT migration project, nor should it be considered that way.<\/em><\/mark><\/p>\n\n\n\n<p class=\"has-text-align-left\"><br>As mentioned, long-term migration projects will hardly solve your current and near-future overdue and bad debt issues, but:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>IT should however be (partially) involved to provide <strong>high-quality data<\/strong> and required data connections,<\/li>\n\n\n\n<li>and should be your <strong>Business Partner<\/strong> to support your financial KPIs.<\/li>\n<\/ul>\n\n\n\n<p>Innovative companies use <strong>AI SaaS platforms<\/strong> as a \u2018Sailboat\u2019 accelerator (without any dependencies on existing technical debt) to achieve quick returns and supporting your finance objectives. We have seen other examples in the market where Finance AI initiatives are forced into a long and costly migration &#8216;container ship&#8217; with uncertain outcomes, huge costs and unacceptable timelines.<\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-center\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec257e\" class=\"has-inline-color\">Where do you want to be? <\/mark><\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"256\" height=\"256\" src=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/finger-point.png\" alt=\"\" class=\"wp-image-3686\" title=\"\" srcset=\"https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/finger-point.png 256w, https:\/\/aividens.com\/wp-content\/uploads\/2024\/07\/finger-point-150x150.png 150w\" sizes=\"(max-width: 256px) 100vw, 256px\" \/><\/figure>\n\n\n\n<p>The model we highlighted above can provide you with the right foundation to have the right conversations inside your organisation to make investment decisions based on a solid business case.<\/p>\n\n\n\n<p>The proof of the pudding is always in the eating. We would be very happy to further explore our model within your current business context. Please reach out to us if you would like to have more details and\/or support in building your business case.<\/p>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-a89b3969 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link has-white-color has-text-color has-background has-link-color wp-element-button\" href=\"https:\/\/aividens.com\/demo\/\" style=\"border-radius:5px;background-color:#ec257e\"><strong>Schedule a discovery session with our Credit Management Experts <\/strong><\/a><\/div>\n<\/div>\n\n\n\n<div style=\"height:30px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Learn more about our new model, developed to calculate the potential financial returns and efficiency gains if potential payment problems can be proactively anticipated.<\/p>\n","protected":false},"author":9,"featured_media":3674,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-3672","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/posts\/3672","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/comments?post=3672"}],"version-history":[{"count":34,"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/posts\/3672\/revisions"}],"predecessor-version":[{"id":3746,"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/posts\/3672\/revisions\/3746"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/media\/3674"}],"wp:attachment":[{"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/media?parent=3672"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/categories?post=3672"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/aividens.com\/nl\/wp-json\/wp\/v2\/tags?post=3672"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}