For years, Kyocera Industrial Ceramics Corporation relied on Dun & Bradstreet to make sound credit decisions on Fortune 500™ companies as well as small businesses. The company’s best-in-class credit approval process leveraged critical data elements such as trade data and corporate linkage. But when the economic downturn impacted their business, Kyocera made the decision to go to a lower-cost provider, only to return the following year for the quality of Dun & Bradstreet reports.
Kyocera Industrial Ceramics Corporation manufactures industrial ceramic components, cutting tool products, LCDs, thermal print heads, metalized assemblies and industrial lenses. The company is a subsidiary of Kyocera Corporation of Kyoto, Japan. Kyocera only extends credit up to 25% of a company’s net worth, so the credit department works closely with the sales teams to determine anticipated credit limits and business volume.
Kathleen Victoria, Manager - Credit & Collections with Kyocera, uses Dun & Bradstreet’s trade data insight to build a best-practice credit assessment approach that measures customer credit scores (such as PAYDEX and financial stress), as well as overall industry performance. On a range of 1 to 5, scoring 1, 2 or 3 likely signals strong credit fundamentals. Scores falling below a 3 triggers additional questions: What is causing the low score? How is this customer paying its vendors? Does this customer have a trend of late payments?
“It’s always helpful to see if it’s a seasonal thing. Sometimes you can tell if a customer had a big dip and it’s coming back,” Victoria says. “You can go to the customer and ask whether there were extenuating circumstances during that time period.”
In addition to tracking a customer’s payment trends, Kyocera leverages Dun & Bradstreet’s deep corporate linkage insight to support its credit decisioning. For instance, a private company with questionable credit fundamentals might actually be a subsidiary of a parent with much stronger credit fundamentals. Knowing the parent can make a huge difference in extending credit to the subsidiary with a much higher credit line and level of confidence.
Finally, Dun & Bradstreet’s extensive insight on suits, liens and bankruptcies gives Kyocera an additional lens to evaluate a customer’s creditworthiness. An otherwise strong customer might have a tax lien simply because it is disputing an issue with the IRS. In other cases, a customer might have been in bankruptcy proceedings for an extended period of time or sought bankruptcy protection multiple times, raising warning signals.
The Switch: Recovery Prompts New Scrutiny on Costs
Kyocera found itself at a crossroads in 2010: Should it stay with Dun & Bradstreet, or shift to a lower-priced competitor? Amid a struggling economy and cost-conscious corporate environment, the Kyocera group scrutinized its credit data resources. “We were coming out of a recession and were still really hurting from it,” recalls Victoria. “We had to make a decision. We felt we had to make a change.” Kyocera decided to switch to Experian to take advantage of cost savings.
Kyocera has a diverse customer portfolio. While a large number of its customers are public or large companies, 300 accounts fall into small to medium-sized business category. Given that Experian did not have in-depth information on small businesses, Kyocera no longer had the deep credit insight on the small mom-and-pop businesses it previously had with Dun & Bradstreet.
“What we were getting from Experian was a credit report with maybe two trade references. That was not giving us a good enough idea of how this company pays its vendors when there’s only one or two companies reporting,” says Victoria. “We received minimal data in respect to the price we were paying. Experian just doesn’t have enough companies reporting to build up that volume. When we pulled that same report from Dun & Bradstreet there would be 10 or 11 companies reporting.”
Using Dun & Bradstreet, Kyocera has the critical information it needs to inform its credit decisions:
- Detailed trade data
- Small business information
- Corporate relationships
The Return to Data Quality and Affordability
The lack of quality reports particularly on small to medium-sized business was a show stopper for Kyocera. They returned to Dun & Bradstreet for two primary reasons:
- Dun & Bradstreet’s superior trade data, which provided more accurate scoring on customers and prospects, and
- The opportunity to choose a more agile, cost-efficient contract with Dun & Bradstreet
Kyocera could now leverage the right features and focus on the most critical elements of its credit assessment process.
“We always look at every data point because there can be data driving a customer’s credit score up or down,” says Victoria. “I don’t want to miss that and get caught in a situation where the credit score looks really great because certain things are happening, but in reality the customer’s score should be much worse.”
Using Dun & Bradstreet, Kyocera has the critical information it needs to inform its credit decisions: detailed trade, small business, and corporate linkage.
“If you don’t have trade data, you’re not going to have accurate scoring,” Victoria says. “All of our decision makers never really wanted to leave Dun & Bradstreet because, deep in our gut, we knew that Dun & Bradstreet quality reports were going to be better.”