Overcoming the Biggest Challenges in Credit Management

In this post, we continued the conversation with Thomas Lundström, Founder of CapAid, to explore the biggest challenges businesses face in credit management today. With his extensive experience in financial consulting, Thomas provided valuable insights into these challenges and how companies can navigate them. 

Q: What are the biggest challenges companies face in managing credit effectively? 

"One of the biggest challenges is that customers are demanding longer and longer payment terms. Companies like Volvo, which I had experience with, have pushed for extending payment terms from 60 to 90 days. However, instead of simply extending these terms, Volvo understood the potential risk this posed to their smaller suppliers. They realized that if these smaller companies went bankrupt due to cash flow issues, it would disrupt Volvo's entire supply chain. 

To address this, Volvo developed a financing platform that allowed them to keep the extended 90-day payment terms while ensuring that their suppliers could receive payments within just five days. This was a significant move because it balanced the needs of both the company and its suppliers, ensuring the stability of the supply chain. However, not all companies are as proactive as Volvo, and for many, the challenge of managing extended payment terms remains a significant issue." 

We have developed an effective and affordable system to fight for good payment terms

Thomas Lundström
Founder & Chair of the Board, CapAid

Thomas is the founder and driving force behind CapAid. He holds a Master's degree in Economics from Hanken School of Economics in Helsinki and is passionate about value creation and helping others succeed.

He has over 30 years of experience in financial consulting, including areas such as working capital management, corporate financial risk management, and financial steering.