European Waste Management Leader Cuts Bad Debt in Half
SITA was originally the abbreviation for Société Industrielle des Transports Automobiles, established in France in 1919 to collect domestic waste using motorized vehicles. The company now operates internationally, and SITA Netherlands has about 40 locations and employs more than 2,200 people. It provides waste management services for about 70,000 companies and collects and processes household rubbish for almost 4 million people in the Netherlands. The company’s work also includes maintaining and managing sewers and grease traps, as well as soil remediation.
As described by Rick Dijkers, Credit Manager, SITA Netherlands, here’s how the company’s partnership with Dun & Bradstreet has bolstered the company’s critical risk management decisions.
Any half-decent company engages in active credit management. Customers like to play the game of delaying payment as long as possible because the credit suppliers provide is cheaper than anything a bank can offer. This is something particularly prevalent in today’s economy. The solution for a service provider like SITA is to send the invoice as early as possible and engage actively in credit management. In recent challenging economic times, we saw a noticeable change for the worse in companies’ payment practices, across all sectors. Customers started to delay payment of invoices or were even unable to pay them at all. Our aim was to intervene before the issue became even worse. That’s why we introduced a credit-monitoring system for all our customers, new and old.
How It Works
On a daily basis, we have tens of thousands of customers with invoices outstanding. Effective tools are essential in order to maintain an overview. So we ultimately turned to Dun & Bradstreet. Thanks to the extensive database, we can see exactly where the risks are and whether or not it is worthwhile doing business with a particular company. We were also looking for tools that everyone in the company can access. It is important that sales staff can use them without having to bother our financial staff. With the tools from Dun & Bradstreet, that’s possible.
We use Dun & Bradstreet’s Global DecisionMaker (GDM), Portfolio Manager and DBAI. Credit management is now an integral part of our entire policy. When it comes to potential customers looking to arrange a roller bin contract - companies with a fixed fee and regular delivery dates - it is important to know:
- How long they have been in business?
- Does it make sense to enter into a permanent contract with them?
The biggest risk we face is with companies where the quantity of waste varies on a daily basis, which increases the uncertainty of payment. For this reason, we subject these companies to much more rigorous checks such as:
- What does their balance sheet look like?
- What is their operating capital?
- Have there been issues with bankruptcy?
GDM assesses these elements and issues advice and Portfolio Manager provides clarity on existing customers. We make a decision based on the extensive report as well as the advice from DecisionMaker. If the analysis results are poor for certain customers, we may still do business with them, but only under specific additional conditions. But usually the analysis is pretty decisive.
Results and ROI
I am highly satisfied with the tools from Dun & Bradstreet. Implementation went really smoothly. Comparing the situation now with what it was before, the number of bad debts has been halved. Provisions for bad debts and the average term for creditor payments have also fallen. In addition, our staff can manage their time more efficiently because customers who are potentially bad payers are identified from the outset. This leaves them more time to spend on the current portfolio.’
For a company like SITA that operates in all sectors of the market, it makes sense to use an extensive database and analysis tools, especially in times when companies are increasingly delaying payments. It helps us to maintain an overview and limit our risks. The Dun & Bradstreet tools are also very user-friendly. It is easy to distinguish between different regions and different types of customers. Because we are living through a crisis that is affecting all parts of industry, it is extremely important to continue to monitor. The right support and tools from Dun & Bradstreet help us to achieve that.