background

A top freight brokerage with its own fleet, warehousing and distribution facilities recently celebrated its 20th birthday. Though not an old company, it moved quickly from serving regional locations to providing the world with some of the most comprehensive logistics solutions in the industry. This has earned it broad recognition, including multiple business awards and top-50 listings. The road’s been smooth-going, right?

Not so fast.

“A.J.,” the company’s director of finance, said that until recently Accounts Receivable management remained a challenge. “As we grow and extend more credit in this economy we have to be risk-averse, always,” he said, adding that although the company took appropriate steps to minimize days-to-pay, it still struggled with the problem of high balances of 90 days or more.

The challenge

At the heart of the company’s value proposition is an elevated customer service culture that focuses on teamwork, continuous improvement and results. For its sales and AR teams, that meant adopting new strategies both for creating new customer accounts and extending credit limits for existing ones. The question was, how to accomplish this while guarding against bad credit risk decisions?

“Our industry requires us to make quick decisions and not waste time running a credit report and waiting on an application, reviews and financial information,” A.J. said. “We’d literally find ourselves having to compare, side by side, an old credit report with the new report so that we could drill in and see what changed. It was a pain.”

On the back end, the company faced a drain on resources due to chasing down slow-paying accounts and trying to manage the potential for bad debt write-offs and loss, he added. The challenge became how to reduce credit and collection costs while still providing a quality account experience and timely results for customers?

The company is innately about continuously improving in order to help their customers grow and succeed, after all. That’s when A.J. realized that Ansonia Credit Data’s Dashboard was the ideal solution for meeting – and exceeding – customer expectations by eliminating the tedious task of manually sifting through data. Ansonia’s Dashboard soon proved to be the ultimate AR tool for automating the company’s credit risk evaluation process and quickly prioritizing their portfolio. In so doing, the company has been able to make more informed credit decisions while collecting money faster, lowering bad debt and streamlining cash flow.

the results

After only nine months of moving to Dashboard, A.J. showed his team’s significant progress to the company’s president and chief financial officer. “I had the confidence to tell them we’re looking good,” he said. “I showed them our total AR profile by risk and how we’ve worked with that distribution to reduce high-risk accounts.”

The result was a 90-day balance that had dropped by more than half, from higher than the industry average at 9% to nearly even with the average at 4.3%.

A.J. finds Dashboard to be broadly useful, including in two key areas:

• Risk distribution. After sending company data to Ansonia, A.J. checks Dashboard each week for a snapshot of the company’s entire AR portfolio. “This helps identify high-risk accounts,” he said. “I focus on accounts that had days-to-pay issues during the previous week to see if what I’m hearing correlates with what Ansonia and the overall industry are reporting.” He added that this improves his discussions with his AR specialists, as well as supports his analysis of the company’s total AR profile by risk and the steps taken to reduce exposure when meeting with the president and CFO.

• Account search. A.J. uses Dashboard with his credit department on a daily basis to perform risk assessments that help determine whether to grant immediate temporary credit extensions. “I take a deep dive into a customer’s details through the Account Search feature, looking at their payment history with us, as well as within our industry and overall,” he explained. “This gives me the confidence to extend or deny credit or, if necessary, request further information such as updated financial statements.”

  For example, a customer with a good score for the nine months since coming onboard approached the company for a higher credit limit. However, a quick check using Ansonia’s proprietary Risk Score on Dashboard which surfaces largely hidden negative credit trends, showed they had gone from medium to high risk proprietary. This alerted the company to act quickly before trailing indicators such as days-to-pay began to deteriorate. “Instances like these tell us we need to pump the brakes and ask more questions,” A.J. said. “The positive result has been that our days-to-pay balances have shifted to more low-risk accounts in our portfolio’s risk distribution.”

Modern transportation is extremely costly and savings are everything. Moving forward, A.J. said he plans to regularly explore Dashboard features to better prioritize collections and help turn payables into cash more quickly. “Before Ansonia’s Dashboard, I relied on clunky internal reporting methods without the benefit of data from within and outside the industry,” A.J. said. “Dashboard is a standout tool in today’s age of on-demand data and key performance indicators. It’s an amazing tool.”