Benefits of Trade Credit Management (TCM)
Trade credit is based on the confidence that the customer will be able to pay in the future. In addition to reducing commercial risk, trade credit management offers:
- Guarantee of business continuity. A certified company organises itself to sell only what it is certain to collect and collects payment for everything it sells, thereby increasing liquidity and reducing the risk of insolvency.
- A mark of quality or recognition. It facilitates better insurance and financing terms, as well as access to financing (the fewer defaults, the better the bank will treat us).
- Reduction in financing costs. Based on a turnover of €100 million, with an average Days Sales Outstanding (DSO) of 45 days, a debt is generated with an interest rate of 7%. Interest expenditure therefore amounts to €875,000 per year. If you can reduce the DSO to 30 days, the cost is only €583,000. (100 x 7% = €7,000,000 per year / 12) x 1.5) or (100 x 7% / 12)
- Integrated Management System. The requirements for Trade Credit Management can be integrated into an ISO 9001 certificate.
GCC Consultancy
- Commercial Credit Management Certification Consultancy to help you obtain the certificate confirming that your management system complies with MacM or MRCM.
- Internal audit. We verify and assess Credit Management (CM) in accordance with the requirements of the Credit Management (CM) certification.
- Strategic outsourcing of Commercial Credit Management certification, ensuring continuous process improvement. This can be integrated with ISO 9001 certification.
GCC certification requirements
“Certification as a creditworthy company” demonstrates a proactive approach to sound trade credit management. If you do not proactively demonstrate that you are not just another company, you will be treated as just another company.
There are the MRCM and MacM standards for trade credit management:
- The MRCM standard has 143 auditable points, relating to organisation, staff, controlling, processes, systems and auditing. To obtain the MRCM certificate, a minimum score must be achieved.
- In the case of MacM, the requirements are divided into six categories: Organisation, Staff, Control, Processes, Systems and Auditing. Processes make up the bulk of MacM. They are described under 15 headings. These range from the definition of a flowchart of work processes, risk classification, established payment terms, claims guarantees, solvency and risk optimisation, and alerts, right through to debt recovery and claims management.