In this episode of Business Insights, we take you through how to improve the strength of your ledger, with CreditorWatch’s Trade Consultant for DebtorLogic, Lucinda Judd. In these times of uncertainty for businesses, ensuring that your customers are reliable and able to pay on time is critically important for your cash flow.

CreditorWatch’s DebtorLogic tool can help in two ways: by helping to identify those customers that are most likely to pay late or not at all and also allowing you to target those businesses in your industry that show the best payment behaviour.

To find our how DebtorLogic can help your business improve the quality of its ledger, get in touch with Lucinda at lucinda.judd@creditorwatch.com.au.

INTERVIEW TRANSCRIPT

Hello and welcome to the latest episode of Business Insights. I’m Michael Pollack, Head of content at CreditorWatch and I’m joined today by Lucinda Judd, Trade Consultant for DebtorLogic at CreditorWatch. Thank you for joining us, Lucinda.

Lucinda

Hi everyone.

Michael

Now, we are obviously here today to talk about all things DebtorLogic, but let’s just start with the lay of the land. We’re seeing that a lot of businesses are currently in a very different state to what they were pre-COVID which has created quite an uncertain trading environment.

CreditorWatch’s Business Risk Index is showing that trade receivables continue to decline and court actions are picking up which is an indicator that the banks and the ATO are resuming their regular cycle of collections and CreditorWatch expects insolvencies to continue to increase across 2022.

As the RBA has also noted, the recovery is going to be long and protracted, so as Omicron or Deltacron as we’re now talking about, and the devastating floods on the East Coast have shown, these externalities can be really swift and severe and can impact the entire economy.

So, I think it’s fair to say the businesses that come out of this in the best shape will be those that act now to get a jump on their competitors. Would you go along with that Lucinda?

Lucinda

Oh, definitely I think being proactive is key at the moment due to all of the uncertainties that we are seeing in the market at the moment.

Michael

Sure. So, could you just tell us how businesses can best utilise data to strengthen their balance sheets and improve the quality of their ledgers?

Lucinda

Yeah, look I think you kind of hit the nail on the head there with the business conditions at the moment. [They’re] really really uncertain and I think we’re in a time where creditors can probably no longer really rely solely on those traditional risk indicators to identify distressed business.

Trade payment data I think can really help by providing creditors a bit more visibility on payment behaviour across the market. You can see a customer’s propensity to pay an outstanding amount and also any delinquency within your ledger as well, which is great that you’ve got that additional visibility there. Generally speaking, deteriorating payment behaviour is a lead indicator that an entity is experiencing financial difficulty so by being on top of these early warning signs of risk and trade activity. Our customer base can really take a more proactive approach to their debt management.

Michael

That’s really the key isn’t it – detecting those early warning signs. So how can CreditorWatch’s DebtorLogic tool help in this regard Lucinda?

Lucinda

DebtorLogic is my bread and butter. It provides a data driven analysis of your ATB or your aged trial balance to highlight your risky debtors, late paying behaviour and also put some accounts to prioritise for collections.

It’s going to break down your information into some really easy to read graphs and charts so that your collections team can quickly establish risky debtors in conjunction with an outstanding balance as well. So, you can very quickly and easily segment your ledger into a risk category so you can see who’s got a cancelled ABN, whose got court actions or payment defaults and just focus specifically on that.

We also offer really customisable reporting functionality within that field so that you can download reports from the system on your chosen filter. So, whether it be a risk category, which accounts are falling into a specific aging bucket state or industry, risk scores so you can take a really targeted approach and create some more prioritised call lists for your collections team based on that that data that we’re seeing.

Michael

Sure, so DebtorLogic obviously not only allows you to identify delinquent payers or customers that are paying late for example, but it can be used proactively as a sales tool. Tell us a bit about how that works.

Lucinda

Yeah, definitely. So DebtorLogic is going to also profile your customers essentially based on high risk and low risk. So, if you see that a customer is falling into a low-risk score category of an A to a C, then your sales team could potentially choose to focus on that list of debtors for further credit extensions, some bonuses or incentives for continuing on with that low risk behaviour.

But also having the industry and state breakdowns allows them to target maybe an industry that’s been doing quite well throughout this COVID period, through the floods, through everything that we’re seeing in the market at the moment, you can target those strengths within your ledger whether it be for sales or marketing, for prospects, or even you know potential credit extensions as well.

Michael

Great. Now what are some of the other ways that DebtorLogic can help with credit management? How can it help improve collection rates for example?

Lucinda

Yeah, really great question. So, one of the real strengths within DebtorLogic is our customer insights graph so we actually combine small business and corporate trade data to help you understand really what sort of risk a customer represents to your business by looking at how they pay their bills across the market.

So that’s what customer insights is focusing on is really comparing how you’re paid against the market. So, this allows your collections team to target you know, maybe the accounts that are paying you 90 plus days where they’re paying the rest of the market one to 30 days that is straight away seen as some low- hanging fruit and those accounts falling into that category can be identified as low-hanging fruit and the accounts to target for collections.

You know this is going to help to improve your collection rates within your portfolio but also your DSO as well. So really great visibility using the customer insights graph.

Michael

Great. Now CreditorWatch also offers a free ATB analysis to help businesses improve the quality of their ledgers. Could you just tell everyone what this involves?

Lucinda

Yeah, exactly so the free ATB analysis is a great way for our customers to see DebtorLogic in action and to get some rich data insights on their data specifically so rather than us just going through some dummy data, we actually book in a time, upload one of your ATB reports and go through all of those findings together.

So, we’ll schedule in a 20-to-30-minute session and discuss all of those findings together and I would definitely recommend going through that exercise, especially now just to get a really good health check on your ledger at the very least.

Michael

Thanks, Lucinda, for that great overview of DebtorLogic. Now if you’d like to take up her offer of a free ATB analysis. You can get in touch with Lucinda at lucinda.judd@creditorcatch.com.au. You can also ask any questions you might have about DebtorLogic and that email address you’ll find in the podcast description as well. Well thank you Lucinda.

Lucinda

No, it’s lovely catching up Michael thanks a lot.

Michael

No problem at all. It was a pleasure. Thanks for listening everybody. Some really valuable information there I’m sure you’ll agree on how to protect your business in this uncertain trading climate. All business insights will be back next Wednesday with more tips on how to protect and grow your business. So please join us then. Bye for now.