Minimal damage at less cost
- Peter Klijn | Manager Finance customers & treasury | DSG Services B.V.
Building materials supplier DSG Diensten BV (hereafter DSG) is deliberately not credit insured. The company’s motto is, “You should only insure that which you cannot bear the burden yourself. As far as accounts receivable management is concerned, DSG solves this with careful policies and corresponding analyses. CreditDevice is a valuable partner here, especially because of all its knowledge of the construction industry.
DSG: wide range of buyers
DSG, which includes Stiho, Baars & Bloemhoff and Bouwcenter Filippo, supplies any Dutch company needing building materials on a daily basis. That ranges from contractors to the handyman around the corner to large, nationwide construction companies. Peter Klijn, Manager Finance Customers & Treasury at Stiho, has held many positions within the company and has enjoyed driving from Brabant to Nieuwegein for fourteen years. Marketing, sales support, CRM, business & control and banking and insurance: he has had it all under his belt. Recently he became responsible for both accounts receivable and accounts payable within DSG. After integrating the different teams, the new team will consist of 23 people by the end of this year.
Customer-level estimation
According to Peter, the contracting industry has become a lot more creditworthy in recent years. This has also influenced the interpretation of credit management at DSG. “During the banking crisis we were still credit-insured, but we haven’t been for a few years,” he says. “That provides more policy freedom and new opportunities. At the same time, you have to absorb losses yourself. Every year there is a big setback in between. Then it’s a matter of using the knowledge we have and the noises we hear to make a correct estimate at the customer level. We use CreditDevice’s credit reports and advice as a guide for this, but our own payment experiences and the turnover that comes with them count at least as much.”
Signaling changes
Suppose DSG is about to accept a new customer, but suddenly signals changes, what happens? Peter: “Then we first ask the account manager or branch manager if the person is experiencing the same thing. Often we also put it to CreditDevice: can you explain where this drop comes from or why we are getting a different advice from our own figures? Depending on the answers and on the relationship with the customer, we act accordingly. Sometimes we refrain from doing business, but most of the time we find a customized solution. Precisely by timely analysis and comparing our limits with the credit limits from the reports, you try to get ahead of this kind of situation whenever possible.”
- 'We do set a target on our claims every year and we have stayed below that for the past three years. We have been able to keep claims at at least the same level with fewer costs.'
Why CreditDevice?
DSG happily partnered with CreditDevice in 2017 after a period of “successful shadow running. Peter: “We are very satisfied with the service, the combination of products and the value for money. The approachability is also pleasant: if we have questions, we are quickly addressed and receive clear explanations. In addition, it has added value that CreditDevice has so many relationships with similar companies in the construction industry: this gives us better insight into payment behavior within the sector as a whole.”
Risk analysis
“For every new customer who wants to buy something on credit, we request a credit report from CreditDevice for the benefit of the respective debtor manager. On a monthly basis, that’s 150 to 200 reports. Also, if we need a higher limit for a customer or if a customer is above a certain turnover, we periodically check whether there are no crazy things on the balance and request a new recommendation. With just under 1,000 clients, we do such a check annually, so that’s about 20 per week. That’s quite manageable. Of course, we don’t do everything manually. Every week all changes above a certain percentage arrive in our senior in the mailbox. That filters everything by the degree of risk and outstanding amount, and then certain actions come out of that. We have about 3,000 to 4,000 applications a year, so a tool like this helps tremendously with that!”
