How to segment your debtors without ending up with twenty exceptions
The strategic customer and the one who is always late should not get the same letter. Here is how to divide them up and still be able to run it.
- Divided by
- Amount, risk and relationship
- Number of groups
- Three or four
- Must be written down
- Who may grant an exception
You have three or four debtor groups, each with its own cadence, and a written rule for who may depart from it.
Most reminder processes are built as one cadence for everyone. That is easy to run and wrong at both ends of the customer list: the strategic customer gets a standard letter she should not have received, and the one who is always late gets the same friendly nudge as everybody else.
The alternative is not treating people differently on instinct. It is writing down which groups exist and what happens in each of them.
AccountabilityNew in the platform
Step by step
- 01
Decide what the split is for
Segmentation without a purpose turns into a report. The purpose here is narrow: to decide who gets the automated cadence and who gets a phone call first. Everything else — discounts, credit limits, sales effort — are different decisions on different axes.
- 02
Pick at most three axes
Size of the amount, level of risk and value of the relationship will take you a long way. The amount decides what is worth spending time on. The risk decides how fast to escalate. The relationship decides whether the first step is a letter or a call. More axes give more groups, and more groups do not get run.
This is where it goes wrongThe temptation is to add industry, geography and length of relationship. Every new axis doubles the number of groups and halves the chance the rules get followed.
- 03
Settle on three or four groups
In practice most end up with something like: the strategic accounts, the bulk, and the persistently late. Some add a fourth for new customers with no payment history yet. More than four and it is no longer a cadence — it is one-off cases with a smart name.
- 04
Give each group its own cadence, not its own tone
The difference between groups should sit in the timing and in who makes contact — not in how sharply the letter is written. The strategic account gets a call before the letter goes out. The persistently late get the letter straight away and at shorter intervals. Everyone gets the same lawful deadlines and the same courtesy.
This is where it goes wrongA harsher tone for the small customers is not segmentation. It is a decision about who gets treated decently, and it is worth avoiding.
- 05
Write down who may depart from it
The exceptions will come. One large order, one call from sales, and the cadence stops applying. So write down who can put a case on hold, for how long, and that it has to be noted on the file every time. Then the exception stays an exception rather than becoming a new rule.
- 06
Review the split twice a year
Payment behaviour changes. The customer who sat in the difficult group last year may have a new bookkeeper. Put a fixed date on it, or the groups become something somebody once decided.
This is where it most often goes wrong
Not because anyone is careless, but because the mistakes are easy to make and only surface once it is too late.
- 01
The segmentation lives in a spreadsheet
If the groups are not set up in the system that sends the reminders, they do not exist. They are an intention, and whoever presses the button sends the same cadence to everyone anyway.
- 02
The large customers end up with no cadence at all
Softer handling slides easily into no handling. The strategic account needs a deadline too — it just has to be met with a call rather than a letter.
- 03
The groups are built on revenue alone
The largest customer is not necessarily the most expensive one to be owed money by. A mid-sized customer who is always sixty days late ties up more capital than a large one who pays on time.
