Connect with us

BUSINESS

Decision-making in times of crisis: should they be based on gut feeling or data?

Decision-making in times of crisis: should they be based on gut feeling or data? 29

By Marieke Saeij, CEO at Onguard

Decision-making is a crucial part of every business and is something organisations do each and every day. That said, it is not always easy – particularly in uncertain times such as these. As such, businesses decisions are often based on a combination of factors. In some instances, companies will leverage data to help inform their decision-making, but at times, they will rely on their own experience or ‘gut feeling’. However, there are some occasions, such as the current crisis, in which relying solely on previous experience would be impossible given that nobody has faced a situation quite like this before.

Yet, even in midst of a global pandemic, the need to make business decisions remains and to some extent they may be even more crucial to ensure the survival of organisations. Therefore, in a wildly unprecedented situation, how can companies mitigate such vast levels of unknown risk? This is where finance departments can play a vital role: using facts, figures, and in-depth analysis to determine which risks are worth taking, which investments should be made, and which should be avoided. An essential part of this process is data.

Data-driven decisions

The amount of data businesses have at their disposal is growing exponentially with IDC predicting that the Global Datasphere will grow from 33 zettabytes in 2018 to 175 zettabytes by 2025. This growing volume of data can be of immense value for organisations – helping them to gather the insights needed to make informed busines decisions. According to Onguard’s FinTech Barometer 2020, a quarter of companies consider themselves to be very data-driven – meaning that data is used to make decisions within these organisations. Over half of the organisations surveyed (53%) mainly use data for analysis, decision making and predictions.

This data-driven approach to decision-making can offer finance departments a multitude of opportunities. For example, credit information on customers is becoming increasingly rich and, as such, can be leveraged to make more accurate and informed predictions about consumer behaviour. This can provide businesses with extremely useful insight before they accept a customer, enabling them to predict the expected growth of the account, the chance of bankruptcy or the payment behaviour of the customer. Thanks to these insights, finance professionals can then identify opportunities and risks more quickly and make appropriate decisions on that basis. In turn, this will enable them to manage and strengthen their cash flow more effectively.

Detecting deviations in payment behaviour

Marieke Saeij

Marieke Saeij

As well as helping businesses to make informed decisions about prospective customers, being data-driven also helps them to make decisions regarding their existing customers. By feeding customer payment data into solutions that make use of artificial intelligence, companies can identify possible problems early – or even predict them ahead of time. As such solutions recognise patterns in behaviour, organisations can then foresee potential problems and better prepare so that they are ready to take the appropriate action when customers start showing signs that they may not pay. For instance, when it has been identified that the customer has deviated from their normal payment patterns, the finance department can proactively contact the customer about paying their invoices to avoid getting into arrears.

The role of the credit manager

While data certainly provides guidance and insights, what does it mean for credit managers? Data is key to the smooth running of many business functions, especially as companies navigate the unprecedented situation caused by the COVID-19 pandemic. However, credit management is all about relationships and although data can provide insight into overall payment patterns, it does not reflect the relationship with the customer. For example, a credit manager will know that when they call a certain customer once, payment will be made, but data doesn’t have the emotional intelligence to pick up on individual variances like this. After all, customer relationships could be soured if the personal approach is lost altogether and decisions are purely automated based on data.

For finance professionals, it is therefore important to find a balance between using data-driven insights and maintaining a personal relationship with the customer. Not only does this hybrid approach allow data to be used as a tool to limit risks, but it also enables companies to offer a more individual customer experience. Unfortunately, there is no data on what ‘goodwill’ will yield in the future, but ultimately, adding a personal touch to tasks such as credit management will result in higher levels of customer satisfaction, and in turn, help to retain their business for the future.

Continue Reading

Recent Posts

The lockdown money revolution 30 The lockdown money revolution 31
FINANCE2 days ago

The lockdown money revolution

By Granville Turner, Director at Turner Little. Many Brits have found that lockdown has been beneficial for their money, having...

Self-employed taxpayers and Making Tax Digital 32 Self-employed taxpayers and Making Tax Digital 33
BUSINESS2 days ago

Self-employed taxpayers and Making Tax Digital

By John Hemming, CEO of Cirrostratus Exedra, the company that runs the VAT Direct Making Tax Digital Service The HMRC’s ambition...

Auditor regulation and litigation - down to the Wire(card)? 34 Auditor regulation and litigation - down to the Wire(card)? 35
BANKING2 days ago

Auditor regulation and litigation – down to the Wire(card)?

By Tom Snelling, partner at Signature Litigation and David Entwistle, a regulatory lawyer and legal risk specialist Introduction The collapse...

Why it’s time to adapt to the virtual world: how to master online negotiations 36 Why it’s time to adapt to the virtual world: how to master online negotiations 37
TECHNOLOGY2 days ago

Why it’s time to adapt to the virtual world: how to master online negotiations

By Tony Hughes, CEO at Huthwaite International, a leading global provider of sales, negotiation and communication skills development Virtual negotiations...

Protecting against man in the middle attacks with dynamic linking 38 Protecting against man in the middle attacks with dynamic linking 39
FINANCE1 week ago

Protecting against man in the middle attacks with dynamic linking

By David Vergara, Senior Director of Product Marketing at OneSpan In recent years, the booming growth of mobile applications has...

The Case for Banks to Digitally Transform: Iterating out of lockdown 40 The Case for Banks to Digitally Transform: Iterating out of lockdown 41
BANKING1 week ago

The Case for Banks to Digitally Transform: Iterating out of lockdown

By Sudeepto Mukherjee, Senior VP, Banking EMEA & APAC, Publicis Sapient. Before COVID-19 disrupted every imaginable part of society, banks...

Difficulties of Getting on the Property Ladder Post-Pandemic 42 Difficulties of Getting on the Property Ladder Post-Pandemic 43
LIFESTYLE1 week ago

Difficulties of Getting on the Property Ladder Post-Pandemic

There is a lot of talk about what’s going to happen to the housing market over the next few months....

Russian Doll: Building digital capabilities into a bank’s core 44 Russian Doll: Building digital capabilities into a bank’s core 45
BANKING1 week ago

Russian Doll: Building digital capabilities into a bank’s core

By Ian Johnson, Managing Director of Europe, Marqeta COVID-19 has left its mark on every industry, and banking is no...

How the US and Europe's COVID-19 Responses Have Affected Exchange Rates 46 How the US and Europe's COVID-19 Responses Have Affected Exchange Rates 47
TRADING2 weeks ago

How the US and Europe’s COVID-19 Responses Have Affected Exchange Rates

In living memory, few events have thrown the reputations of different countries and regions under such intense scrutiny as the...

Recognising the surprise PE investment potential in southern Africa 48 Recognising the surprise PE investment potential in southern Africa 49
INVESTING2 weeks ago

Recognising the surprise PE investment potential in southern Africa

By Martin Soderberg, partner at SPEAR Capital. An event of historic significance passed largely unnoticed in the world’s media recently,...

Why Banking is experiencing a second wave of transformation 50 Why Banking is experiencing a second wave of transformation 51
BANKING2 weeks ago

Why Banking is experiencing a second wave of transformation

By Keith Pearson, Head of Financial Services EMEA, ServiceNow The financial landscape has seen significant changes in the last six...

Making your mark: an introduction to trademarks 52 Making your mark: an introduction to trademarks 53
TRADING2 weeks ago

Making your mark: an introduction to trademarks

By James Turner, Director at  Turner Little  Are you looking to protect your brand? The chances are, you are –...