Making crucial decisions in times of crisis
Making business decisions is something we do every day, but it is not always easy in these uncertain times.
We often make decisions based on the one hand data or on the other and experience, or the proverbial gut feeling. However, relying solely on experience during the current crisis is impossible. After all, we have never experienced a crisis quite like this, so there is little experience to go by. However, ad hoc decisions must be taken to ensure the survival of organizations. The financial department plays an important role in this: which risk is acceptable? And should there be an investment or no investment? Data is therefore essential in making these decisions.
The FinTech Barometer 2020, Onguard's annual survey, shows that a quarter of companies are very data-driven. In other words, within these organizations data is used to make decisions. In most cases, half of the organizations (49%) data is mainly supporting processes. Yet we see now that being data-driven offers financial departments many opportunities. Consider, for example, credit information that is becoming increasingly rich and therefore has a predictive character. Before a customer is accepted, insight into this data is very useful. For example, you can predict the expected growth, the chance of bankruptcy or the payment behaviour of the customer. With these insights, finance professionals can identify opportunities and risks more quickly and thus manage and strengthen their cash flow even better.
Predicting payment behaviour
Being data-driven also helps in making decisions with regard to current customers. When you link the customer's payment behaviour to artificial intelligence, you can identify possible problems early or even be ahead of them. By recognising patterns, you are ready when the first signs arrive of customers who are not going to pay. You can then proactively contact the customer about paying invoices to avoid arrears.
The role of the credit manager
The data provides guidance and accurate insights, but what does this mean for the credit manager? Is data everything? Data is of great help today, especially since we have never experienced how such a crisis will develop. Yet credit management is all about relationships. The data provides insight into overall payment patterns but does not reflect the relationship with the customer. A credit manager knows that when he calls a certain customer once, for example, payment is made. That is why it is crucial not to abandon the experience entirely, but to combine it with available data. Dare to take risks for the sake of the relationship. Unfortunately, there is no data on what 'goodwill' will yield in the future, but there is a high chance that the customer will stay or return.
As a finance professional, it is therefore important to find a balance between what data reveals and the personal relationship with the customer. This makes data a tool to not only limit risks but also to be able to work more personally. When you take a risk, this is a conscious choice and there is more room for personal contact. Keep seeing the customer as a customer and not just as a debtor. He is ultimately the one who impacts your income.
This article was contributed by Marieke Saeij, CEO, Onguard