Data-driven credit management software for customer segmentation

Credit management voor customer segmentation

Using credit management software makes it possible to bring together all customer information and generate a comprehensive customer profile. It also enables automatic profiling and segmentation. This creates a 360° view of customers, reducing risks of unpaid invoices and improving predictability of cash flow. And therefore, in the long run, customer satisfaction, or customer experience. How? We explain that in the blog below. Read further and discover how Onguard’s credit management solution can help your organisation streamline its customer journey. 

One of the reasons why organisations use data is to make informed business decisions. This is also a welcome addition within credit management. If you and your company want to start realising this, the first thing to do is to use a combination of internal and external data. But where do you get the information you need? And how can you as an organisation use the information as a basis for decision-making processes? The roadmap below provides guidance on how to use data:

1. External data sources for you credit management tool
2. Using internal data sources for risk management
3. Credit management software
4. Customer information leads to customer segmentation
5. Segmentation within credit management platforms

External data sources for your credit management tool

To get external data, there are two types of main suppliers, namely data collection companies and insurance companies.

Organisations such as Altares Dun & Bradstreet, Experian and Graydon provide financial information on customers from their own database. These reports often contain ratings or scores based on an analysis of the company’s financial data.

For organisations that send out particularly high-cost invoices, credit insurers offer policies with coverage for unpaid invoices. These insurers provide credit limits and additional information so that, as an organisation, you always know the maximum financial consequences if a customer, covered by this insurance, fails to pay. The information provided is obviously invaluable in credit management. If customers default on their payments, this can have serious consequences and provide important insights for the credit management department.

These external sources of information are useful in day-to-day credit management. They not only enrich the information you have about your customers, but also provide insights into which customers have more leeway and which ones you need to keep an eye on.

Using internal data sources for risk management

To successfully monitor, segment and score your customers, it is important to also access internal information from a number of sources.


The ERP systems within every organisation are a rich source of information. For instance, they contain invoice data and customer contact details. In addition, there is even more information available that can be used to improve the predictability of credit management. For example, based on specific data within the organisation, such as the use of coding, customers can be categorised. This information can then be used to strategically segment customers, enabling a personalised approach.


The CRM system provides interesting insights into the stages of new sales opportunities and helps to plan ahead, be proactive with sales and avoid risks, for example. Valuable insights into customer data, derived from CRM data and automatically loaded into credit management software, are a good contribution to the credit management process.

Excel without Excel

When considering credit management, relying solely on Excel spreadsheets is likely not the most efficient approach for your organisation. You wouldn’t run a marathon in sandals, and by that same stroke it wouldn’t make sense to use Excel for credit management in this digital age. While Excel is widely used for various tasks, its limitations become apparent in credit management processes. Excel lacks the sophistication required to handle the complexity of customer segmentation, profiling and data integration necessary for an effective credit management process. Managing large volumes of customer data manually in Excel can lead to errors, inconsistencies and inefficiencies in the decision-making process. Transitioning to dedicated credit management software offers automation, real-time data analysis and enhanced functionalities tailored to your credit management needs, ultimately improving your entire finance process.

Credit management software

Besides these sources, as a company you can also use data from order management systems. Often, individuals in different departments collect different data. Yet this information is not always shared, because in many cases the priorities of a credit manager are different from those of, say, a sales manager. It is therefore important to keep communication flows between departments open and clear. For example, orders refused by customers can be important for the credit management department. In addition, information from the complaint management system is very valuable. Invoices that remain unpaid often have various causes that you, as a credit manager, can quickly resolve. Think, for instance, of a wrong address or the absence of a PO number. When it is clear what is not going well, complaints can be resolved resulting in an improved credit management process and customer relationship.

Once information is gathered from both internal and external sources, your company will be able to fit all the pieces of the puzzle together and arrive at a company-wide vision, and make better decisions as a business

Customer information leads to customer segmentation

We have seen that data-driven credit management provides the best basis for drawing a solid profile of customers. The combination of internal and external data sources provide detailed information on various customer characteristics. For example, information on company size, sector, location, payment history and creditworthiness. With this data, you can then proceed to customer specification. For example, you can see which customers structurally pay on the same day every month. These customers all have the same payment behaviour and can therefore be grouped in the same segment. Only when it is clear that a customer does not pay at the agreed time can you send a reminder. Customer segmentation thus makes it possible to define the best strategy for a specific group of customers to achieve faster payment. It also allows the organisation to identify customers who need more attention. Finally, customer segmentation helps reduce the risk of payment default and achieve better results for the entire customer portfolio.

Segmentation within credit management platforms

Once the right information is in, it is important to segment the customer portfolio into ‘homogeneous groups’. Customer behaviour is not predictable in all cases and is subject to change. For most organisations, monitoring and manually tracking behaviour is simply too labour-intensive and prone to errors. Fortunately, credit management tools are available that monitor changes in behaviour within customer portfolios and then adjust strategies accordingly. This is done automatically every day, minimising risk and ensuring that the right actions are taken for each customer.

The customer experience journey

Segmentation and profiling of customers thus provides more insight into who you do business with as an organisation. This also helps in making other decisions. For instance, if a customer regularly disputes invoices, a decision can be made to stop giving the customer credit until the amount due is paid. In addition, segmenting also helps determine which customers can be given more effort and resources. On the other hand, recognising patterns in when and how customers pay can clarify which customers do not need reminders. This not only saves time and resources, it also helps you stand out among other providers.

How customer segmentation leads to a perfect customer experience

Using credit management software not only makes the segmentation process much faster, but it also ensures increased cash flow, more cooperation between different business departments, better risk analysis and, finally, a better customer experience. It is also becoming increasingly difficult for organisations to differentiate themselves on a product, service, or price level. Competitors offer the same products or services and the price is also more or less the same. The only place where organisations can really make a difference is on the experiences they offer the customer, or customer experience. The investment in customer segmentation will also prove its worth here. After all, it ensures that you serve and approach your customers in the right way and through the right channels. In many organisations, this goes from initial customer contact to sales just fine. But when the credit management department comes around the corner, customer experience is suddenly no longer considered important. It is time that customer satisfaction is also integrated within the credit management department.

How the credit manager becomes a relationship manager

Behind the scenes, the credit management department does much more than just collection and is directly related to customer satisfaction and the company’s reputation. Credit managers analyse the past in order to prepare for the future. In fact, every employee in this department is in contact with its debtors, or customers. After all, debtors are still customers that you, as a company, would like to see walk out the door with a smile. However, these customers have come to the credit management department because they are struggling with payment problems or arrears.

For you as an organisation, it doesn’t seem positive; after all, you want customers to pay for your delivered products or services. But what you also want is for them to remain satisfied and loyal, so that they come back to you in the future. As a credit manager, it is therefore very important to keep the relationship with the customer good. And that is immediately what comes up most in conversations with CFOs. They set themselves the goal of keeping invoice processing time (DSO) as low as possible, but in this they forget that on the other side is a customer who wants to be served well. And to turn around one negative experience, as many as 12 positive experiences have to be counterbalanced.

How to lower your DSO

Giving a customer attention after they have placed an order but not yet paid is essential. It is often seen as a negative action, whereas it is an opportunity to give these customers that warm feeling as well. Show what you stand for as an organisation and turn this experience into a positive one. After all, retaining existing customers is as much as six times cheaper than acquiring new ones. Increasing customer satisfaction also has a positive impact on lowering DSO. You want to know how, as an organisation, you ensure that the customer gets the same positive experience at every station. Even when a customer has payment problems and ends up at the ‘Credit Management’ station.

How to handle your debtors as customers

More and more companies realise that high customer satisfaction contributes to the success of their organisation. The customer journey, which a customer makes before deciding to buy a product or service, is therefore becoming increasingly important. Thus, approaching the customer and properly mapping out his requirements and wishes is the first step in a correct, effective way of communicating. But does this also apply to credit management? Is more possible during the last step in the order-to-cash process than just sending a classic, impersonal invoice?

Discover the advantage of Onguard’s multichannel communication modules

The communication process starts with how a debtor is known within an organisation: is he really a debtor? Or is it treated as a customer? A debtor is nothing but a customer, who still owes money. This customer also needs to be satisfied and every contact moment is a prime opportunity to satisfy him or her. Onguard has therefore developed various communication modules together with its partner Alphacomm. These ensure that even during the last step in the order-to-cash process, communication within an organisation runs smoothly. Whether it is communication via a paper invoice with QR code, a text message with iDeal payment link or, for example, a digital invoice. The customer decides how he or she wants to receive their invoice.

Experience shows that many people who face payment arrears actually do not know what to do at all. Standard solutions offered are sometimes confusing and customer-unfriendly. As a result, people panic and cannot see the wood for the trees. For instance, insurance premiums remain unpaid and payment reminders pile up. A personalised video or voice messaging can help, by explaining calmly and clearly what exactly is going on. They are all customer-friendly, well-secured communication modules that ensure faster payments and improved cash flow.

Tailored credit management with Onguard solutions

Constant and sustainable innovation is the engine of any organisation. The cooperation between Onguard and Alphacomm provides a wide range of modern, technical tools. This enables customers to connect faster to the jointly developed platform. A cooperation that is all about carefree use of the latest credit management techniques with just one point of contact. This allows organisations to focus even better on their own customers, who increasingly want to manage their affairs or finances themselves. Young people will find it more attractive to pay a payment reminder quickly via text message, while older people still value an accompanying text with explanation on paper. The growing need for self-service has therefore been deliberately taken into account in the way the various communication modules have been developed. For instance, a customer can scan the QR code on an invoice or payment reminder himself or decide, based on the video, which offered solution is preferable to get rid of the payment arrears as soon as possible.

How account payable management within Onguard leads to higher customer satisfaction

Over 90% of the organisations already using the available communication modules experience higher customer satisfaction, according to Alphacomm. According to Alphacomm, payment reminders are paid at least 25% faster than before, more and more people proceed to a solution and thus avoid additional costs or worse: suspending car insurance, for example, because the invoice has not been paid. Because it will happen to you that you unknowingly take your car out on the road uninsured, with all the consequences.

The importance of credit management in business

Credit management plays a vital role in the overall financial health and stability of a business. It helps reduce the risk of financial losses due to non-payment or delays in payment by customers. By implementing effective credit management practices, businesses can minimise the impact of bad debt, improve cash flow, and maintain healthy customer relationships.

As mentioned, one primary benefit of credit management is the ability to identify and evaluate potential risks associated with extending credit to customers. Through credit assessment processes, businesses determine the creditworthiness of customers, so that credit is only given to those who have the financial capacity to honour their payment obligations.

Furthermore, credit management allows businesses to establish appropriate credit limits for customers, ensuring that they do not exceed their financial capabilities. This helps prevent customers from accumulating excessive debt, which could lead to payment defaults or financial distress. Timely payment is another critical aspect of credit management. By closely monitoring credit terms and payment schedules, businesses can ensure that customers adhere to their payment obligations. This not only improves cash flow but also reduces the need for collection efforts and potential legal actions to recover outstanding debts.

Moreover, effective credit management fosters healthy customer relationships. By maintaining open lines of communication and providing clear payment terms, businesses can establish trust and transparency with their customers. This, in turn, enhances customer loyalty and satisfaction, leading to repeat business and positive word-of-mouth recommendations.

In conclusion, credit management is an integral part of any business’s financial strategy. It involves assessing the creditworthiness of customers, setting credit limits, and closely monitoring credit terms and payment schedules. By effectively managing credit, businesses can minimise the risk of financial losses, improve cash flow, and maintain healthy customer relationships. Implementing robust credit management practices is essential for long-term success and stability in today’s competitive business landscape.

Curious? Check out how Onguard’s credit management solution can help your organisation achieve all the above.


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