Collections Strategies during COVID: Cash Flow Vs Customer Loyalty in a Volatile Economy

What you’ll learn


  • Impact of COVID on Industries in the European Union
  • Portfolio Analysis and Customer Segmentation in the COVID world
  • Customer Segmentation during COVID
  • Radical Collection strategies
  • AI and RPA for proactive collections
  • Ferrero’s Success with AI and RPA

Collections Strategies during COVID need to be radically different because the change is unprecedented. Companies like Ferrero have already implemented AI and RPA in their process and are ahead of others.

Based on invoice tracker statistics, in Europe, the % of invoices unpaid moved from 16% pre-COVID to around 30% in April and jumped to 53%+ at the end of April. In this scenario, it is very tempting to go aggressive on collections given the short-term liquidity demands. But will it yield results especially when your customers are genuinely affected?

Collections teams around the world have suddenly found themselves in a critical position helping to stabilise cash flow. But with AP teams on the receiving end trying to do the same, this unique situation has required a different approach to the norm; more granular and tailored based on knowing customer histories, their industries, using segmentation and prioritisation and applying a good dose of humanity.

In a recent webinar, Highradius focused on “Cash Flow Vs Customer Loyalty” which collectors should prioritise and the thin line between perseverance and empathy. A group of experienced professionals shared their insights and Collection strategies that would help collectors in a dilemma and take strong decisions.

speakers-Cash Flow Vs Customer Loyalty in a Volatile Economy

Impact of COVID on Industries in the European Union

Eefje Van Craen is the Head of Risk Solution CEE at Bureau Van Dijk- A Moody’s Analytics. BvD is a major publisher of business information and specialises in private data combined with software for searching and analysing data. She did a major analysis on Impacts of COVID specific to industries and portfolio analysis and customer segmentation during COVID.

Impact of COVID on Industries in the European Union

According to the study conducted, it was inferred that General sectors like Automotives and Construction were severely affected by the Focus sector in manufacturing vehicles and construction of residential and non-residential buildings heavily affected. On the other hand, General sectors like Agriculture with a focus on processing, growing crops were rather not badly affected. Chemical industries in the general sector with the focus sector on the manufacture of rubber and pharmaceutical were unscathed but focus sectors of petroleum were affected as a domino effect of a hit in Automotives, construction and distributions.

Portfolio Analysis and Customer Segmentation in the COVID world

According to research done by Moody’s macroeconomic team. They were able to assess and rank the impact of COVID on various EU countries using data buckets such as GDP, Industrial production, Utilisation capacity and Employment by industry. Thus correlating it with the impact on industry and effect on the country

Portfolio Analysis and Customer Segmentation in the COVID world

BvD also conducted a case study with a large Chemical company with a focus on the European Union in large economies like the UK, Germany, France and Spain. Analysing close to 12,000 customers in the portfolio and using their Market reactive score, they were able to do the portfolio analysis in Pre-COVID and Post- COVID world. The blue graph represents Pre-COVID and Orange representing post-COVID. Pharmaceuticals companies and agro-animal production had an extremely positive outcome during the COVID crisis whilst retail trade essentials saw a moderately positive outcome because of the lockdown effect. Plastic manufacturing and retail trade non-essential commodities had a negative and automobiles and transportation were impacted the hardest

Case Study- chemical company with focus on EU

BvD used sector and macroeconomic data for the parameters for portfolio analysis with a focus on AR Data and Ownership information.

Eefje Van Craen Head of Risk Solutions CEE quote-imageWe are quickly adapting to the changes in the market environment and our portfolio analysis is easily adaptable

Customer Segmentation during COVID

Mark Harrison, Founder, and CEO of The Association of Credit for Central and Eastern Europe is an industry veteran in credit and collections space who shares his insights on customer segmentation and collection strategies in current times.

Mark HarrisonCustomer Segmentation during COVID Know your Customer and your Customer’s customer

Mark went on to explain that monitoring the payment behaviours of customers is crucial now. If the payment is erratic, it can be a sign that the customer is affected and not able to pay but it may also mean that the company is delaying payments. Industry impact of the COVID on customers is also crucial. The recession which was talked about for years was a ticking time bomb which was detonated with the COVID crisis and the majority of them are going through the crisis.

Key parameters to look at while customer Segmentations

Mark also added that the recession is just the start of a series of hardships that collectors might face in the coming years. With trade to and from the UK to be affected by the imminent Brexit. Most companies are in a seismic shift to adjust themself for Brexit and the corona crisis has just exacerbated and had rub salt on the collector’s cash flow wound. Recession + Brexit + Government regulations are the perfect storm for collectors as the cost of borrowing and taxes are going to increase. Collectors need To collect efficiently,

Radical Collection Strategies

Radical Collection Strategies

Mark stated that “Telephone is the most powerful collections tool in a collectors arsenal. With most people saying email is the best way to communicate. For customer relationship and getting the pulse of the customer, there is nothing like calling up the customer and getting a commitment from them. Sending invoices on weekends will work wonders for some customers since people are relaxed to see the email on weekends rather busy Mondays.

LinkedIn with more than 675+ million members worldwide, including executives from every Fortune 500 company, LinkedIn is the world’s largest professional network and almost all your customers are bound to be there. Constantly keeping in touch with them is a great way to build rapport and expedite the collections process.

Empathy Pays Back….

Mark HarrisonCustomer Segmentation during COVID With Empathy, companies will stay with you as your customer for generations to come

Marks with his 40 years of experience in credit and collections space was confident that empathy is the way forward in these tense times. Many companies are genuinely affected and giving them flexibility like partial payments, credit cards, and guest links is a good way to keep them happy. If you help them during the tough times, they will remember and continue the goodwill.

AI and RPA for proactive collections

Bill Weiss,HighRadiusBill Weiss, VP Business Development Credit and Collections, HighRadius Customer Segmentation during COVID AI will never replace empathy and thoughtful decision making

Role of Humans and Machine in Proactive Collections

In Highradius, it is always Humans + Machines for a better world. With AI and RPA introduced for collections, Collectors can focus more on strategic decision making rather than mundane tasks. Highradius Collections Cloud uses random forest regression model to predict payment dates and based on the predicted dates, the solution gives a prioritised worklist for the collectors based on AI-enabled predictive ageing and suggests the next action item to be taken. This helps collectors to customise collections strategies, better visibility towards cash forecasting and compose aggressive strategies for high-risk accounts.

With Contactless Collections for Medium and Low-Risk Customers, Collectors can proactively collect using automated correspondence. With the ability to send guest payment links in emails, customers can immediately click on the link and pay using ACH or credit card.

Whether you are sitting in the office or working from home, it is very easy to implement Highradius solutions in a very short span of time

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Ferrero’s Success with AI and RPA

Ferrero, the world’s second-biggest manufacturer of branded chocolate and confectionery products embraced Highradius automation and reduced its DSO by 20%.

Manual Order to Cash at Ferrero

Before automation, Ferrero had an inefficient credit worklist and workflow which clogged credit. With manual correspondence and dunning, collectors were having a tough time. This was made worse by the manual backup of data aggregation. All these bottlenecks affected productivity a lot.

bottlenecks affected productivity a lot

By having data integrity of credit, collections and Invoice presentment and payment, all in an intertwined and seamless manner. Ferrero was able to maintain data integrity by breaking silos. The whole process was automated.
As an adopter of Highradius solution, Ferrero increased their collector’s productivity by 40% and improved DSO (from 57 days to 25 days)

Learn how Ferrero reduced DSO

Read the case study

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HighRadius Collections Software automates and optimizes the credit & collections management process to improve collector efficiency, minimize bad debt write-offs, improve customer relationships, and reduce DSO. It provides a complete set of tools to optimize and automate the credit collections management process and enable the better prioritization of credit collections activities All the information you need (invoices, dispute information, POD, claims, tracking info, etc.) on each case is automatically presented in a collections work-space and is ready for use. Apart from the wide variety of benefits that it has, it also comes with some amazing features like CADE (Collection Agency Data Exchange), collector’s dashboard which has prioritized collections worklist, automated dunning & correspondence, dispute management, centralized tracking of notes, call logs & payment commitments along with cash forecasting functionalities. The result is a more efficient collections team that contributes to enhanced cash flow and reduced DSO.