Bespoke credit solution balances risk and service

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Introduction

A business built on helping protect people and property, Tyco’s Fire Protection division designs, sells, installs and maintains fire detection, sprinkler and suppression solutions to a huge range of clients worldwide.


Situation

Tyco understands risk. It has built a successful global business helping customers manage and reduce theirs. But at the same time Tyco has to be aware of its own risk – not least the financial consequences of late or non-payment from clients.

Which is why its credit management team does everything it can to support late paying clients, working with them and the Tyco sales team to ensure appropriate credit limits are set, and always keeping the communication channels open.

This allows for a level of sector and cultural sensitivity that managers feel is important in striking the balance between reducing risk and retaining loyal customers.

However with such a global and diverse client base, and in such a fast moving environment, credit managers were under pressure. Existing processes were considered ‘laborious’ and ‘bureaucratic’. Managers were forced to spend too much about signing off figures, and not enough addressing the needs of the customer base and the business.

It was time to transform the credit management function, and Tyco choose longstanding partner, Dunn and Bradstreet, to help it do change.

Solution

D&B devised a tailored system called TDM, or Tyco Decision-Making tool, to dramatically streamline its credit management processes. The system was built from the ground up using D&B’s innovative software development tools that allow applications to be built, tested and rolled out quickly and easily.

Information entered into TDM includes, for example, relevant product groups, past and predicted turnover of clients, margins, payment histories and so on. TDM works on the basis of tailor-made scorecards developed by D&B and Tyco for determining credit limits.

The scorecards are specific to the culture of a region where the client is located, building on findings obtained when historic data from a number of past years was fed into the system. While initially just five or six were envisaged for the Europe, Middle East and Africa area, in the end no less than 13 different scorecards were needed.

The TDM’s user interface consists of an easy-to-read dashboard featuring ‘traffic lights’. All relevant data and communications are stored in the system and the entire decision-making process is automated, providing workflows for automatic approval by the correct person.

It can be viewed by everyone and is fully compliant.

Result

The entire design, development and implementation went without a hitch. The system is now fully operational and has enabled the business to undergo a considerable increase in setting limits. This is good for business, but since careful consideration is applied it does not damage client relations.

Among credit controllers and salespeople there is now a better understanding of the relationship between commerce and awarding credit. That improves the decision-making process and strengthens support for the decisions that are taken.

And by having a clearer, common tool for the setting of limits, Tyco’s credit and sales functions can function as a single team serving the interests of the business.

“Not only is the process of credit assessment quicker, but we now also have greater qualitative insights. It can be used universally and optimises cooperation between credit management and sales. All this makes it more than a system for setting credit risks and limits. It really does strengthen our business.”

Roy Kuipers, EMEA Credit Manager, Tyco Fire Protection Products

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