Tesorio's New Customer Collection Score
Quickly assess payment risk across your customer base with Tesorio's new Customer Collection Score. This new analytics feature enables you to immediately take strategic action to keep your cash flowing.
The Customer Collection Score categorizes customers based on past payment history, allowing your collections team to benchmark your customer's payment performance as well as understand your overall collections health.
Customer Collection Score Categories
After analyzing payment data across hundreds of companies & research with industry experts to understand typical performance patterns and best practices, the Tesorio team created 5 categories of customers:
Great: customers who pay, on average, early, on time, or no more than 15 days past the due date of an invoice. We incorporate a 15 day grace period into this category to account for situations such as the occasional payment delay, weekends/holidays, or check payments that have been mailed but received on a delay.
Good: customers who pay, on average, between 16 and 45 days late. Customers in this category are likely responsive to the first steps of collections campaign outreach, but their consistent late performance may indicate AP practices which are not concerned with proactive on-time payment but are responsive to reminders and follow-up inquiries for payment.
Poor: customers who pay, on average, between 46 and 90 days late. Customers in this category are consistently late payers. Their consistent late performance may indicate less sophisticated AP practices and workflows or frequent questions or disputes about invoice data which causes delays in the payment process. These customers may benefit from more frequent, and earlier, outreach related to invoice payment.
Risk: customers who pay, on average, more than 91 days late. These customers are consistently very late, and deserve focused attention from the collections team to understand the overall health of the relationship.
New: customers who do not have payment history in Tesorio yet are classified as new and there is no way to know which category a “New” customer may eventually fall into. It is common to not have the correct AP contact in place for new customers, which will put timely payment at risk. Collection teams are advised to consider these customers as cautiously high-risk due to the unknown nature of the relationship at this point in time.
How do your customers stack up?
At the time of this release, analysis of our entire customer database shows most customers are paying fairly close to the due date. Benchmark your Customer Collection Scores against the composition of customer risk across all Tesorio customers to see how your team is performing.
Once you understand your customers’ overall behavior, how do you decide what actions to take?
Best Practice #1
Tesorio always recommends asking for confirmation of receipt of invoice when it is first sent out to ensure it has been received by the correct contact and has all the necessary details for AP processing. If any required information is missing, such as a missing PO number, this step is the best time to get the matter resolved.
Best Practice #2
Tesorio recommends sending a reminder email before the due date. Some information that can be included in the message are to remind the customer of the upcoming due date, ask for confirmation that the invoice is being processed in the system, and to ask for a scheduled payment date.
With these two guiding principles in mind, use the categories below to take the following actions:
Great: Keep doing what you’re doing! Ensure that you’re communicating with customers early to identify any issues before invoices become due. Consider ways that you can thank these customers or show your appreciation for their great partnership.
Good: These customers may benefit from more frequent, and earlier, outreach related to invoice payment. Consider an audit of the most recent payments for some of these customers to identify common trends that may be causing delays. You may adjust the reminder email or create a new dunning campaign specific to the issue you discover.
Poor: These customers should have a more proactive approach to collection efforts, especially in the early days before an invoice is due. Strive to receive confirmation from the customer that the invoice has been received and that it has all the required details for processing. Consider getting other stakeholders involved earlier in the process if there is no response in your effort to receive verification that the invoice is processing and receive confirmation of a payment date. A manager, sales rep, or CSM may be able to get a quick response with a simple email where a collector is struggling to make contact.
Risk: Collaboration across stakeholder teams and escalation (internal and external) is likely necessary for customers in this category, and may take place even before an invoice is due. Strive to receive confirmation from these customers that invoices are received and that all required information for AP processing is correct, such as necessarily PO numbers. If no communication is received from the customer, or if communication stops, flag these customers for escalation as soon as possible and don’t wait until they are significantly past-due before raising them as an issue. Managers, AEs, CSMs, and even CFOs may have valuable ideas for next steps to help collect sooner from customers in this category.
New: Until their payment trends are established, customers in this category may benefit from outreach prior to invoice due dates so that your team can confirm the correct contacts and resolve any questions related to POs or supporting documentation prior to payment. Some customers may not begin counting down net terms until all the requirements are met, so it’s best to confirm these details are in place immediately after the invoice is created.