Le Nouvel Economiste article on Aston AI:
As a fintech, the company has focused on the challenge of accelerating the transformation into cash of customer invoices awaiting payment. Amaury de la Lance, the company’s CEO, points out that “25% of SMEs go bankrupt for lack of sufficient cash flow, and according to several studies, late payments weigh on the French economy to the tune of several tens of billions. Business leaders face three major challenges when it comes to customer risk: firstly, analyzing customer risk and performance – most companies spend 20-30% of their time sorting through heterogeneous data to make decisions. Secondly, to optimize collection costs, and lastly to establish a cash culture to promote collaboration between its sales and customer risk analysis departments to encourage ‘safe sales’, i.e. selling to good payers.”
FULL TEXT OF ARTICLE
In recent years, customer risk management has evolved. As good managers and visionaries, business leaders need to monitor and optimize receivables. This exercise relies increasingly on reliable and innovative technological tools. Digitization must be taken into account, as well as new regulations and the increasing scarcity of financial information.
by Ezzedine El Mestiri
Preventing customer risk through structural, commercial, legal and financial information enables company managers to make the best decisions when choosing their partners – both customers and suppliers. Service providers are there to meet this need. Ellisphere supports and secures decision-makers, in France and abroad, with solutions based on the legal, economic and financial information of their business partners. This information, coming from public and private sources, concerns over 8 million economic entities active in France and over 150 million companies worldwide. Our job is to capture this information, add value to it, and then distribute it to our customers, informing them on a daily basis about their business partners, to help them manage their risk, mainly customer and supplier,” notes Olivier Tronchon, Marketing Director. Our ambition is to contribute to a company’s development and enable it to trade with peace of mind with its various partners.”
“Preventing customer risk requires constant monitoring of the sales circuit, from prospecting to collection”.
Today, companies take better account of customer risk. But it’s hard to keep track of all invoices, to anticipate delays and to spot payment defaults. To prevent it, it’s important to set up a systematic follow-up process that starts quickly, in order to establish an ongoing dialogue with the customer. Above all, customer risk prevention requires constant monitoring of the sales cycle, from prospecting to collection. “During this process, certain milestones must be respected: prospecting, conversion into a purchase order, delivery, invoicing and collection. Prevention must cover the entire chain. Simple, effective mechanisms can be put in place to reduce risks, from order taking to invoicing and reminder,” explains Philippe Bernis, President of Direct Recouvrement. You also need to educate your customer to pay on time. In this way, new technologies bring professionalism to the business owner and help him to pacify relations with his partners.”
More accessible information
Digital tools have proliferated to help companies with this task. Aston AI, for example, offers a comprehensive SaaS software solution for optimizing and managing accounts receivable. As a fintech, the company has focused on the challenge of accelerating the transformation into cash of customer invoices awaiting payment. Amaury de la Lance, the company’s CEO, points out that “25% of SMEs go bankrupt for lack of sufficient cash flow, and according to several studies, late payments weigh on the French economy to the tune of several tens of billions. Business leaders face three major challenges when it comes to customer risk: firstly, analyzing customer risk and performance – most companies spend 20-30% of their time sorting through heterogeneous data to make decisions. Secondly, to optimize collection costs, and lastly to establish a cash culture to promote collaboration between its sales and customer risk analysis departments to encourage ‘safe sales’, i.e. selling to good payers.”
“25 % of small and medium-sized businesses go bankrupt due to a lack of sufficient cash flow, and according to several studies, late payments are estimated to cost the French economy tens of billions.”
For its part, Covline publishes a software solution that meets all the challenges faced by companies in terms of cash management, risk prevention, amicable collection and dispute handling. This tool is designed to adapt to all business sectors. Thanks to the Eloficash software solution, decision-makers have a 360° view of outstandings and customer reminders, integrating financial and commercial data, market conditions, credit insurance, litigation, etc. on the same screen,” explains Alain Leonhard, Eloficash’s managing director. You can see immediately, at a glance, what’s relevant and important for the customer. And for the users of our solution, this translates into a reduction in DSO [Days Sales Outstanding] and a gain in cash flow.”
Prevention in mind
“Digital innovation facilitates prevention and enables us to act proactively. In addition to automation, we can predict customer behavior and identify good and bad payers,” explains Alban Sauvanet, CEO of Dunforce. We anticipate payment delays and suggest adapting the relationship, by being more or less demanding. We find that by the third reminder, the customer pays.”
For decision-makers, preventive risk management is essential, all the more so as they now have relevant indicators enabling them to manage their customer or supplier risk in complete safety.
“In addition to automation, we can predict customer behavior and identify good and bad payers, explains Alban Sauvanet, CEO of Dunforce.”
“Smaller companies have specific needs that require shorter decision-making processes. That’s why, in partnership with banking institutions, we offer them tailored products,” says Olivier Tronchon of Ellisphere. These solutions are easy-to-use tools, enabling them to identify a prospect, check the reliability of a supplier, and ensure the solvency of a customer…”
Accessible to all
Improving cash flow and optimizing accounts receivable remain top priorities for entrepreneurs. Two years ago, as a pioneer, Direct Recouvrement took the digital turn by creating Recouvr’Up, a web platform that provides companies with a simple and inexpensive professional collection solution for their most resistant customers. For a subscription fee, users can obtain services without collection fees, and can calculate the amount of late payment penalties,” explains Philippe Bernis of Direct Recouvrement. This dematerialized access is aimed above all at small and medium-sized businesses, which have few resources to initiate collection procedures that are often costly.”
“Thanks to cloud technologies and the SaaS business model, these software solutions are now accessible to everyone, especially VSEs and SMEs.”
Thanks to cloud technologies and the SaaS business model, these software solutions are now accessible to everyone, especially VSEs and SMEs. These technologies enable us to bring together the entire ecosystem on a single platform: factors, credit insurers, scoring, etc.” notes Amaury de la Lance of Aston iTF.
A new customer risk culture
Data analysis enables users to analyze their customers’ checkout cycle, helping them to get to know them better. By applying algorithms, the process is perfected, becoming more efficient by anticipating risks and optimizing the relationship with the customer. Big data and artificial intelligence thus offer solutions favoring preventive and predictive action. “The business manager can implement the right customer risk management approach, because the key is to be proactive, anticipate and be vigilant,” observes Alban Sauvanet of Dunforce. The automation of receivables monitoring, coupled with data analysis, represents a significant time-saver that offers more dialogue with customers.”
These digital solutions are helping to build trust between economic players. Prevention has taken its place in customer risk management, and a new culture is taking shape. “It’s the end of recovery based on the emotion of fear. Since the 2000s, there has been a growing awareness of the importance of quality, customer satisfaction and prevention. Digital technology has brought about a better exchange of ideas and collaborative, interactive relationships,” emphasizes Covline’s Alain Leonhard.
Ellisphere has just launched a new 3rd generation score using machine learning approaches. This new generation of scores makes it possible to cross-reference and exploit large volumes of diverse data in a highly efficient way.
“It’s the end of the overlay on the emotion of fear. Digital has brought better exchange and collaborative, interactive relationships.”
On a day-to-day basis, company managers and decision-makers need to be sure that all their business partners will be able to honor their commitments,” explains Olivier Tronchon. To establish a virtuous circle from prospecting to customer or supplier risk management, we have developed decision-making information solutions tailored to the needs of all companies, whatever their size or sector of activity.”
Digital debt collection
The debt collection sector is also going digital. A number of start-ups already occupy this niche, which is of particular interest to VSEs and SMEs. Gcollect, for example, puts creditors in touch with collection specialists. All the applicant has to do is enter the main details of his or her unpaid invoice into a database, and an algorithm calculates the best rate from the pros. Recouvr’up, a web-based platform for handling unpaid invoices, integrates a whole range of digitalized services. Some are free, such as the late payment penalty calculator.
As for Dunforce, it’s software that integrates with ERP and accounting solutions, and simply processes invoices by e-mail through the platform, which has aggregated a range of technologies to offer an intelligent, easy-to-use virtual assistant. This innovative solution automates invoice dunning. Users save time, reduce the risk of errors and improve their cash flow.
Legalstrat.fr, a legal platform, also offers automated out-of-court reminders. The DebtCatcher platform promises to find people willing to buy debts. But there’s also a brutal collection style in this niche: Badpayeur, a whistle-blowing website, goes so far as to throw the name of a bad-paying customer into the public arena. These specialized firms charge an average 20% commission on the sums recovered. The digitization of unpaid invoices is still in its infancy, and the market potential looks promising.
The DGCCRF keeps an eye on practices
The Direction Générale de la Concurrence, de la Consommation et de la Répression des Fraudes (DGCCRF) tracks down anomalies encountered in amicable debt collection practices, and is constantly issuing recommendations.
It conducted a survey of the amicable debt collection sector (companies and bailiffs), published in March 2018, which revealed numerous anomalies. Deceptive commercial practices were noted, and over 32% of establishments were non-compliant.
Some debt collection companies, for example, use standard letters mentioning charges corresponding to a penal or administrative sanction, which have no place in a debt collection procedure. Others confuse the amicable collection phase with the legal collection phase. And some establishments make unlawful claims.
The DGCCRF has also evaluated the implementation of the new simplified procedure for collecting debts of less than 4,000 euros, which allows, under certain conditions, to obtain a writ of execution from a bailiff without having to refer the matter to a civil judge. This procedure does not appear to be sufficiently attractive to the professionals concerned.
Let’s remind ourselves of a few rules concerning debt collection: the creditor can try to do it amicably without going to court, by establishing a constructive dialogue with the debtor. This has two advantages: it avoids the need to go to court, and it gets the money back more quickly.
There are companies specializing in the amicable collection of debts on behalf of third parties, who can make you believe they are acting with a writ of execution, as if the debtor had been sentenced to repay the sums. Some of these companies do not hesitate to use letters that look like official documents. So be careful.
Inter-company credit is the leading source of financing, representing three times the amount of bank credit.
56 MdsE: the total amount of write-offs for unpaid receivables in France
Of the 63,000 bankruptcy filings observed each year, a quarter – or more than 15,000 – is attributable to a payment default suffered.Source: Figec (Fédération nationale de l’information d’entreprise et de la gestion de créances), study 2017
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