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Former Member

I recently had a discussion with a wholesale distributor who implemented the SAP ERP suite a few years ago.  He was telling me about some of the issues his company was having with their credit processes.  “I think we might have aimed too low when we did our original ERP implementation” he said.  “Maybe we didn’t focus on the credit process as much as we should have”.  As a result, some of their processes are too manual and they don’t have the visibility they would like to have into their overall credit risk because they still are done outside of their ERP system.

So, this wholesaler has decided that now is the time to take another look at some of the functionality that’s available in this area.  As I mentioned in my last blog, one way to know where to invest is through benchmarking, so we’re undertaking a benchmarking exercise on some of their cash to cash processes.

We know going in to the exercise that we will find value, but it will help us quantify it and allow us to measure success.  The overall goal of the initiative is to:

  • make faster credit decisions
  • reduce bad debt write-offs
  • reduce DSO
  • increase collections efficiency
  • improve cash flow

So this wholesale distributor is going to look at better ways of implementing a global credit policy and putting standard processes around assessing a customer’s ability to pay.  This will most likely include factoring in data from credit reporting agencies, but also will include the customer’s payment history and other metrics that impact a customer’s credit worthiness.  It’s also important to make sure that credit lines include real time updates of recent customer activity.  Since this wholesale distributor has a mobile sales force, they will probably want to put this information in their sales force’s hands to be accessed while interacting with the customer using a mobile app like this one that shows real time credit limit utilization and payment history.

They are also planning on taking a look at their collections processes where collection agents reach out to customers whose payments are in arrears or who have disputed invoices.  It’s important to make the most efficient use of these collections agents by prioritizing their work.  The wholesaler expects to find some good DSO improvements by helping the agents spend their time following up with customers that are going to be willing and able to pay.  

A final area to explore is to provide their customers the ability to view their invoices online and make payments or disputes directly, without mailing a check or placing a call to the call center.

When the benchmarking exercise is complete, we will have a better idea as to which of these processes is the most deserving of investment, how close to best practices they already are, and how much rate of return they can expect. 

Let me know if you found this information helpful, or if you would like to explore some areas where your company may wish to take the next steps in your enterprise software journey.

Matt Petersen is the Industry Value Advisor for Wholesale Distribution at SAP America.  He is a wholesale distribution technology expert with over twenty five years of international experience in enterprise software including the last ten years focusing on the Wholesale Distribution industry.  When not focusing on that, he's practicing his putting.

Contact Matt via email at matthew.petersen@sap.comor via Linkedin at

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