ezyCollect Credit Insights classify your debtors into different risk groups based on 3 different smart data sources:
Predictive Late Payment Risk (LPR) scores and Failure Risk (FR) scores from the Australian and New Zealand commercial credit reporting bureau, illion.
The days past due of your open invoices (not including: ‘excluded’ invoices).
Two settings you can configure for past due debts to define their lateness as ‘reasonable’ or ‘critical’ in the Insights configuration.
We apply a combination of conditions to present you with Debtors' Risk Groups and display suggested actions* you may want to consider for each group.
For more in-depth explanation on how this was calculated, please refer to this article.
*All suggested actions presented in ezyCollect Credit Insights should be factored with how well you know your customers and your relationship with them.
Different Risk Groups and corresponding Risk Levels
1) Risk Group: Business as Usual
Risk Level: Low
These debtors’ invoices may be past due but are still reasonably close to the due date. These debtors have been qualified as low risks for exceptionally late payment or seeking legal relief from debts
Suggested actions: Consider extending terms and trade for debtors that rarely leave this group.
2) Risk Group: Watch and Monitor
Risk Level: Moderate
These debtors’ Invoices may be late but are still reasonably close to the due date. However, these debtors may be experiencing difficulty settling debts with other suppliers.
Suggested actions: Consider monitoring these debtors for adverse events or request credit reports for more detailed information.
3) Risk Group: Potential Relationship Issue:
Risk Level: High
These debtors have invoices that are now unreasonably past due. However, these debtors have been qualified as low risks for being exceptionally past due or seeking legal relief from debts.
Suggested actions: Consider calling this customer to understand if there are any unresolved issues. Offering a payment plan could also help.
4) Risk Group: Prioritise Collections
Risk Level: High
These debtors have invoices that are now unreasonably past due. Additionally, these debtors may be experiencing difficulty settling debts with other suppliers.
Suggested actions: Consider making manual communications and negotiating payment plans. Additionally, consider monitoring these debtors for adverse events or request credit reports for more detailed information. For debtors whose poor payment behaviour persists, consider reducing their credit limit and payment terms.
5) Risk Group: Prepare for Legal Action
Risk Level: Severe
These debtors’ combination of highly past due invoices and risks of exceptional lateness or seeking legal relief from debts suggests you:
Suggested actions: Be in direct contact with your customer to seek payment and explain any change of terms to COD. Consider sending a demand letter expressing any intention to commence legal action. Additionally, consider requesting a credit report to see more details about the situation.
6) Risk Group: Bad Debt Risk
Risk Level: Severe
Credit Reporting indicates these debtors are either undergoing adverse events such as a “Strike Off Action” or possess highly overdue invoices with a qualified risk for such events.
Suggested actions: Double-check the debtors’ contact information is accurate before acting on these qualified risks.
Consider moving this customer terms to Pre-Payment if you're still trading with them. Otherwise, consider escalating to a debt collector or getting a credit report for more details about the situation
7) Risk Group: Not Enough Information
Risk Level: Not Applicable
These debtors couldn’t be matched to a business entity with qualified risks for being exceptionally past due or for seeking legal relief from debts.
Suggested actions: Consider improving the data quality of these debtors’ contact information (esp. Providing an ABN or NZBN) in your accounting/ERP system.
Note: To perform suggested actions, please log into your ezyCollect account. Note that some services such as ordering credit check/report, demand letter, debt collection will incur additional costs.