‘Segmentation is at the heart of O2C success’

Segmentation can play a major part in the future of commercial order-to-cash according to a leading industry analyst.

Speaking at a virtual round-table debate run by CCRMagazine, in association with HighRadius, David Quenet, director EMEA consulting, HighRadius said: “If we are talking about credit management, one of the key capabilities is Customers Base Segmentation. In the scope of Integrated Receivables Suite implementation, we recommend deploying credit management first in order to know better and master efficiently your customer base.

“Segmentation, for example, allows you to decide if customer X deserves a discount or customer Y needs to get a penalty. Segmentation is also very important to specify and apply relevant interactions with your customers: preferred correspondence, mail or telephone calls, or reminders.

“Credit management is much more than the attribution of a line of credit.

“We can, for example, imagine a fast integration with your ERPs to reduce, stop or accelerate the business activities of some customers by steering in credit management a dynamic credit bandwidth.”

Meanwhile, Elisabeth Doppelhofer, senior credit manager at Adecco, said: “I still believe telephone calls are the most effective method to chase debt, mainly because if you send an email, it might be read in a couple of days, then the client might need a copy invoice; if you are on the phone you get that response immediately and save a couple of days.

“But where technology can support us is making those calls as effective as possible. We have a dialler solutions, which means every outbound call is actually going to connect and we are also using AI to identify which clients do need that phone call.

“So it is a question of using technology to support your collection strategy and support those telephone calls, making them effective rather than replacing what our collectors do.

“Companies need to find that balance. I have seen some collection systems where the AI element was entirely deciding what the collector needed to do.

“My concern there would be if a collector was not achieving targets, they could potentially just say ‘the system did not tell me to do it’; for me, that is a step too far.

“You still want that accountability and responsibility from the collector and for the system to support what they are doing and make them more efficient.”

Simon Johnson, director of UK credit management at SIG Group, added: “We have also seen that shift to customers preferring email. Partly, I am sure, due to a new generation of manager’s preferred way of contact (compared to calling) but also partly it feels like during the pandemic, with people working from home, many did not have telephone systems integrated.

“We are also looking at Whatsapp and webchat to provide greater contact choice.

“When dealing with lower turnover firms the ability to contact them at home becomes more challenging because they do not have the IT infrastructure and often may be unwilling to provide personal contact details.

“We have noticed post-pandemic that there is a number our customers still working from home where, from an AP perspective they can raise a payment from home bu they are struggling to send us remittances.

“So at any one stage we may be chasing more remittances than pre-pandemic even allowing for our auto allocation systems which tend to be 70% to 75% effective.”

Shaun Rees, credit risk manager at VF International Credit Group, said: “I have found in different forums that recruitment is a bit of a challenge for a lot of credit departments, with different companies offering work from home terms or different salaries.

“Because firms have not been able to keep up their credit controller retention they have had to deal with the controllers being overloaded with admin work such as statement sending and invoice copies, meaning they have struggled to maintain the level of customer relationship that was provided at the start of the pandemic.

“We have had to shift the focus from the low value high volume accounts and have needed to focus on the larger ones, particularly the ones whereby the pandemic has transformed the business to focus more on ventures such as e-commerce.

“We have lots of customers who have changed from the typical brick and mortar model to e-commerce and we have had to shuffled our accounts and strategies, providing greater focus to those strategic ones.

“In doing so we have been looking at different technological implementations that we
could do to take away some of the administrative tasks, such as risk management, collections, cash posting, allocation, everything that goes alongside or within this remit.”