Customer segmentation refers to the strategy of dividing customers into groups based on static and dynamic factors including credit score, type of account and payment method, to improve customer correspondence and compliance to credit policy. It is important for collections departments to segment customers to personalize customer correspondence and help collectors in upgrading their collection efforts. Invoice level segmentation is also one of the trending methods adopted by leading companies to prioritize invoices based on invoice value and due-date. Traditionally, the collectors called the customers for outstanding invoices and overdue payment commitments. This was feasible because of 1) Limited number of assigned accounts and 2) Personal acquittance of collectors with the buyer A/P teams. However, today it is not uncommon for collections analysts to get assigned to hundreds or thousands of accounts. It has become important to bucket customers into segments with similar attributes so that the collections analysts can not only scale collections process with an increasing number of customers but also keep the communications personalized. As per McKinsey?s report, more than 70% of collection calls are wasted! These calls are made for accounts where the customer would have paid even in the absence of these calls. This fact clearly underlines the undeniable threat to the scalability and seamless working of the collections process due to ineffective customer correspondence strategies. Customer segmentation helps in optimizing resources to recover more receivables at less cost. Customer segmentation is based on the fact that every customer stands differently in terms of financial stature, market trends and business relation with the company and the collection efforts. However, many organizations could be categorized into buckets by taking into account a certain set of attributes to finetune the collections process. The next section explores the key benefits and takeaways of customer segmentation in the collections process.