AR Intelligence—Customer Behavior Insights

Welcome to this series of instructional articles on BlackLine’s AR Intelligence platform. We’ll show you how to raise the bar and empower AR finance teams to unlock their own decision intelligence on a global scale.

Purpose

1.     To provide quickly, in real time, the analysis of key customer performance behaviors

2.     Understand customer sales performance and payment performance history, plus understand the relationship between the two

Confidence in supplying credit to facilitate sales is maintained by prompt and regular payments from customers.

Understanding the trends of customers’ behavior is critical to maintaining confidence in continuing to provide credit. Any sudden changes in sales performance will prompt the question ‘why?’ while changes in trends should prompt a re-evaluation of a customer’s credit worthiness.

In the current climate, balance sheets have been severely impacted and will be difficult to assess for some time, so the ability to correlate sales and payment data is vital. That’s because it’s the most up to date reporting that credit and AR professionals can access, to manage ongoing credit risk and confidence to continue to trade.

The data and analysis these reports provide are valuable for sales teams as well as credit teams.

For example, an increase in sales (viewed in isolation) will be seen as positive by the sales organization. However, if this is accompanied by slower payments, this could suggest the customer has a cash flow problem and might be having difficulty obtaining credit from other suppliers, thus subjecting the organization to a higher bad debt exposure.

On the other hand, if a customer continues to pay on time, it may be a better ‘risk’ to increase this customer’s credit line.

• Compare invoiced sales vs. cash by month

• View cash collected by week for previous 12 months
  - Filter by customer or outstanding debt banding

• Filter by calendar year, customer account, or outstanding debt banding
  - View by customer, invoices (sales) vs. previous month as figure and percentage variance

• View customers ranked by size of variance in month-on-month invoicing
  - View by customer, payments (cash) vs. previous month as figure and percentage variance

• Credit Management—to analyze risk profiling of customers and collections strategies using payments performance as the critical lead indicator

• Sales and Commercial Teams—to understand if customer spend is consistent or sporadic and analyze trends that would warrant further review—to increase credit lines where confidence is supported by good payment data or review credit lines and/or payment terms where customer analysis raises concern and reduced confidence in payment ability

• CFO—all of the above

By providing the ability to perform the analysis across the entire customer base—not just the top 100—it enables sales and credit/AR functions to assess customer trends easily and quickly, both independently and collaboratively. Teams can see if any of the data trends suggest opportunities to provide more credit and sell more, or spot danger signs and highlight data that suggests further investigation is required to maintain confidence in providing credit or reducing credit exposure.

These dashboards are powerful and provide the full picture of how a customer is behaving, allowing teams to make better informed decisions and experience improved collaboration between credit and sales teams to achieve the respective business objectives.

Get your copy of the exclusive white paper New Questions to Gain New Intelligence in Accounts Receivable to discover the questions that can challenge your assumptions and help improve your outcomes, objectives, and critical results.