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With growing societal awareness of problematic debt, more companies are optimising their collection strategies.
In the Netherlands, 8.8% of households are struggling with problematic debt, resulting in an estimated annual societal cost of at least €8.5 billion (source: IBO Problematic Debt). As a result, organisations are seeking the right balance between improving their cash flow and demonstrating social responsibility. Implementing an effective credit management strategy can help achieve this.
Prevention and early detection
Preventing debt is more efficient than resolving it. By recognising early signs of payment issues and responding constructively, companies can improve their debt management while helping customers avoid arrears. This is especially relevant for businesses with recurring invoicing, such as energy and telecom providers, insurers, local authorities, and housing associations. However, public transport companies and other organisations offering some form of ‘subscription’ also benefit from insight into their customers’ payment behaviour, allowing them to intervene early to prevent problems.
How does this work in practice?
For companies with high volumes of invoices, further automation of credit management processes leads to greater efficiency and improved cash flow. Here are some key benefits of this automation:
- Monitoring payment behaviour: The best way to prevent payment issues is to quickly recognise them. Deviations or changes in payment behaviour are strong indicators of potential problems. By embedding predictive models into smart business rules, risks and issues are detected early and automatically. This provides organisations with an up-to-date risk profile for each customer.
- Dynamic and customer-focused reminders: A dynamic reminder process adjusts automatically based on the current risk profile of the customer. This keeps the ‘tone of voice’ and planned actions personal, allowing you to respond quickly and effectively to suspected problematic debts.
- Flexible payment arrangements: Provide employees and customers with more flexibility around invoice payments. Establishing and automating payment arrangements increases the likelihood of successful payment. Clear communication, various payment options, and accurate and automatic reconciliation contribute to successful invoice payments and improved customer relationships.
Social Impact
95% of all debts are collected amicably. Increasing this percentage by also collecting more complex invoices amicably has significant social value. It prevents debt-increasing procedures and contributes to a healthier financial position for customers (see also the Contour Scheme for Civil Collections, where the government makes recommendations for new policy). Furthermore, customers appreciate a personal and engaged approach, leading to higher customer satisfaction (NPS) and loyalty.
