In an introductory post to using analytics as an effective addition to your ARM processes, we wrote about the different types of data mining and predictive software, tools, and programs that are available to small businesses. The theory is that if you can better understand consumer trends and behaviors that manifest in your existing outstanding ARM strategies, you can more efficiently reduce the potential for future debts and maximize collections.
That is because part of what you are doing in analyzing the data is determining which accounts are most likely to be collected, thus aligning your collection priorities accordingly. Now that we recognize the importance of using analytics in your ARM, let us talk about some practical applications.
Using demographics and GeoLytics
Traditionally speaking, GeoLytics is a publisher of detailed geographical and demographical data for businesses, academia, government agencies, the public sector, and non-profits, but collectors and accounts receivable managers can use the products for assistance in debt recovery and collections as well. In addition to offering comprehensive, full sets of US decennial census data that go as far back as 1960 and as recent as 2010 on demand, Geolytics also provides market research data to small businesses.
The company offers dozens of specific products and packages, and it can be a little overwhelming for a small business owner who is not exactly sure how census data can help them recover debts. Some of the most valuable products by GeoLytics are those that are able to sociologically profile customers in any given area that share common incomes, household structures, and geographical characteristics.
Perhaps you will find that some of the most severely delinquent accounts in your portfolio share the same commonalities as those in a segmentation report purchased by publisher, giving your company the knowledge it needs to not just reconsider your target customer market, but perhaps limit your future exposure to potentially troubled customer accounts.
GeoLytics reports also give you the ability to break census data out even further to help your company avoid troubled customers, such as areas with high divorce rates, consumers who share similar criminal backgrounds and geographical proximities, and a plethora of multi-variable geographical profiles.
Predictive analysis products specifically for debt collection
Predictive analysis allows users to map, categorize, rank, and score loads of AR data so that past due and delinquent customer accounts can be modeled and collection can be streamlined. The idea is to use technology (typically a software program or a web-based application) to import and classify the data into a scoring rubric that will separate, based on the length and type of delinquency, by most to least likely to be recovered.
With these types of programs, it is all about using historical data performance in predicting the current and future patterns of delinquent accounts. There is a moment when every account is at its peak potential for recovery and predictive analysis helps you pinpoint that moment and act on it.
Using analytics to capture intelligence or insight into your ARM strategies is one of the main cornerstones of DECA’s highly efficient collection operation, and you too as a small business owner or accounts receivable manager can leverage these powerful systems. Give us a call today to learn more about how we can help you minimize your outstanding debts, maximize your debt collection efforts, and use analytics to avoid predictive, future troubled accounts.