Using Predictive Analysis to Create Collection Management Strategies, by Christopher Rios

Traditionally, debt collection involved little more than picking up the phone and convincing the debtor why they need to pay for the products/services sooner rather than later. Today, credit and collection professionals are being asked to adopt more sophisticated techniques. One of the newer techniques utilizes predictive analytics to create collection management strategies. Predictive analytics permits creditors to identify at-risk A/R and focuses collection efforts on those customers with the greatest propensity for paying slow. This combination of historical AR data and predictive attributes will allow creditor companies to review and optimize their resource allocation, provide improved customer service, and to accelerate cash inflows. By doing so, creditor companies potentially reduce unnecessary costs across the credit to cash cycle and accelerate payments from high risk customers.

Inevitably, even the best collection strategies fall short at times. An organization’s fail-safe shouldn’t be to write off uncollectible receivables against its bad debt provision and move on. What is sometimes overlooked is the need for and the benefit of having a robust third party process for dealing with debtors that cannot or will not pay. Third party strategies should include bankruptcy administration, pre-litigation, litigation and mediation strategies.

Establishing a solid process that provides prescriptive treatment for dealing with non-paying, financially distressed customers will help creditor companies maximize the benefits of the third party services being provided. Ensuring you’re maximizing your return on investment and increasing the chances of recovering unpaid accounts receivable are two benefits of partnering with the right service provider.

This topic will be covered at the upcoming CreditScape Fall Summit, September 17-18 at the Tropicana in Las Vegas as I lead the discussion on creating a robust third-party collections process. For more information about the conference, visit www.creditscapeconference.com. I hope to see you there.

Christopher Rios is the Group Leader – Finance Operations for Dun & Bradstreet. He will be speaking at the CreditScape Fall Summit, September 17-18, at the Tropicana in Las Vegas.

CMA Poll Results – Business Credit Reports

CMA Member Poll: Your thoughts on business credit reports? (463 responses)

  • They are a valuable resource 18%
  • They are necessary but not always valuable 17%
  • They are not a valuable resource 1%
  • We carry a contract for reports 17%
  • We order reports as we need them 19%
  • We use more than one brand (D&B, Experian, Equifax etc.) of report 17%
  • We use only one brand of report 9%
Other comments:
“more valuable for private companies”
“Wish more companies would report more accts.”
“We find that D&B reports are totally outdated and wrong information. We belong to a local credit group which is very helpful.”
“We rely on our on trade data reports”
“We don’t use them hardly at all but probably should”

 

 

 

 

 

Enhanced by Zemanta