Credit managers are seeing
the profound effects of technology in their day-to-day operations. Software
programs are conducting credit investigations, sending customers collection
notices and even handling payments once they are received. In a job where
efficiency is key, technology is certainly beneficial; however, credit
professionals are finding there is one task technology cannot replace:
personalizing the creditor-customer relationship.
Picture this scenario: A
customer of more than 10 years has fallen behind on a payment but has a clean
history of making payments on time, with little to no disruption to the credit
department's cash flow. Within the past month, the credit department
implemented new software to send email alerts to customers for failed
payments-a task previously handled by credit managers-that warn the customer
incoming orders will be withheld until payment is received. What the email
doesn't acknowledge is a prior conversation between the creditor and customer
during which the latter explained the reason behind the late payment, which was
made shortly after the discussion.
The technology did not go awry and, in fact,
did the job it was meant to do; the customer was notified of a late payment.
However, the collection email system did not have the capability to include
information from the phone call between the creditor and customer upon which
the late payment issue was resolved. The one-on-one conversation is a prime
example of a personalized discussion that technology cannot replace.
"When you have a customer base of 24,000, you
have to have some type of automation. There's no way around it," said Stephen
Savino, corporate credit manager for Assa Abloy Americas in New Haven,
Connecticut. "We use automatic dunning letters, but we only use them very
sparingly on client balances that are below a certain level where you can't
physically connect with that person."
Although useful, Savino
noted, automatic dunning letters aren't his company's go-to tactic to inform
customers their account will be placed on hold. Instead, a person will contact
the customer before the automatic alert is sent.
As director of customer
operations in finance for UPM-Kymmene Corporation, Pia Porvari, CICP, has
several duties, including credit and collections. The forest-based bioindustry
company headquartered in Finland began automating its credit process in 2017,
with 50% of credit decisions now completed by automation. Credit decisions
previously completed by two dozen people are handled by software, she said, but
a handful of people remain onboard for certain exceptions.
"If the customer swims
through the scoring, the automation makes the credit decision," Porvari said. "But if the scoring model provides a result that isn't efficient enough, then
those analysts look over the available information more thoroughly and may go
to meet with the customer."
Porvari said she also
meets regularly with customers to keep the dialogue open. In return, she is
able to stay on top of what's happening in the industry.
"Graphic paper
consumption goes down annually, so it's important for me to understand how
these customers see the decline and how they address those issues," she said.
Relationship building is
critical for businesses that rely on service and pricing, said Savino. For
example, in the electrical distribution industry, it is likely there are dozens
of electrical distributors who are all selling the same product within a
five-mile radius. But where they differ is service and price. High-tech
companies, such as Assa Abloy, must focus on what Savino calls the "relationship added."
"Sometimes, the customer
will say, 'We can't pay this $200,000 invoice in 60 days,'" the credit manager
explained. "The value that I would add to that relationship is, 'I have three
different third-party finance sources. Let me give you a quote.' We're dealing
with electronic portals and when there are problems, were dealing with a
website that tells us why something hasn't been paid. How do you develop a
relationship with a website? You don't. It's critical to connect with a human
being."
The days of taking
customers out for a round of golf or dinner are infrequent, Savino added.
Credit managers are now adapting to new relationship-building strategies, such
as establishing the "give-and take." For instance, if customers operate
electronically, creditors should ask customers to explain their electronic
process flow, how to operate through an electronic portal and how to proceed
when there are issues with billings within the portal. As businesses adapt to
their customers' process flow, credit managers are enhancing their customer
service. Technology can take care of the menial jobs, Savino said, but it still
takes actual people to run the technology. |