Optimising order-to-cash: a guide for trade creditors – Part 6

At Experian, we understand the challenges faced by trade credit professionals in optimising their order-to-cash (O2C) process. We’ve spoken to credit decision-makers, underwriters, and analysts to identify their core challenges and discuss strategies to move forward. One key solution that emerged is the importance of good data in driving effective dunning practices.

Why good data matters for dunning

Having accurate and up-to-date data is the foundation of successful dunning. Sending letter after letter with little impact is no longer effective. Instead, a proactive approach based on data-driven insights can yield better results. Here are some key ways in which good data leads to better dunning:

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1. Nip it in the bud: Proactive, automated early engagements are essential for effective dunning. By maintaining high data quality in your CRM systems, you can send accurate and timely chasing messages at the push of a button.
2. Assess the options: Not all customers are the same, and a one-size-fits-all approach to dunning is no longer effective. By using account segmentation and analysing data such as total spend or days beyond terms, you can create a more targeted dunning strategy. Identify the riskiest customers and chase them early and often.
3. Personalise the approach: Knowing a customer’s preferred method of contact increases the chances of grabbing their attention the first time. Some customers may prefer paper letters, while others may prefer digital updates. High-value clients may require a more personal touch.
4. Treat customers fairly: Supporting SMEs in a challenging business environment should be a priority for trade creditors. Understanding your customers’ circumstances and treating them thoughtfully and on an individual basis ensures fair treatment for all.

How does Experian help trade creditors?

• Experian’s data cleansing services provide a solid, accurate foundation to build an effective dunning strategy. Inconsistencies and duplication are identified and tidied away, while ongoing monitoring keeps customer information up to date.
• Experian provides Days Beyond Terms (DBT) and query flags as part of dashboards to quickly identify promises to pay and prioritise customers. We also provide commercial risk scores to help you understand which customers should be focused on. Commercial Delphi Gen 6, our industry-leading commercial risk score, uses existing credit agreements, current account turnover data and payment performance data to assess the commercial viability of the business over a 12-month period. Commercial Delphi Cashflow score overlays cashflow indicators on top of a measure of underlying financial strength to predict business defaults.
• This means creditors are always approaching the right customer, in the right way, at the right time.