Tips for a financially healthy company in 2022

Getting to know your customers better and using technology to your advantage are the first steps

The start of a new year is always a time for resolutions. They can be as varied as the intention to start a diet, join a gym or plan the trip of your dreams. Why not take advantage of the arrival of 2022 to catch up on your bills and start living a healthier financial life?  

This, of course, applies to individuals, but also to businesses and companies. The crisis caused by the pandemic has shown us how important it is to have good financial planning to face difficult times, to learn to be resilient in a scenario of uncertainty and to know how to take advantage of opportunities. 

Having a financially healthy business is the first step towards having more cash on hand, increasing profits and boosting the company's growth. Here are some tips for you, the entrepreneur, to start the new year on the right foot.

1. have a good financial plan.

A company can operate in a highly profitable sector or in a segment with great potential, but die because of failures in financial planning. It's a more common situation than you might think, as a lack of lack of planning is one of the main reasons why most Brazilian companies go bankrupt, especially small ones.

Problems such as a lack of information about the market in which you operate, the consumption habits of your potential customers, your competitors and the working capital required are the most common difficulties faced by entrepreneurs.

Planning means looking to the future. In the case of financial planning, it is essential to estimate the behavior of the business's financial flow from now on. For this reason, after defining objectives and targets, it is necessary to x-ray the company's financial situation to understand whether it is being well managed, i.e. whether it has a profit to spare, whether it is in debt or whether it is in a position to go into debt.

Entrepreneurs also need to keep in mind what their strategic objective is: whether it is to expand into new markets, maintain stable levels of growth and turnover or grow at a certain pace over a defined period of time.

Financial planning is only possible after there has been integration between various areas of the company which, in addition to the financial sector, involves human resources, sales and operations. This is because what happens in these other areas has an impact on the company's budget and cash flow.

2. Get to know your customers

Once you've done the x-ray, it's time to get to know your customers better, an essential step for your company's success. Assuming you know who buys or consumes your products and services is clearly not a safe method. That's why the first step is to carry out customer surveys and polls to gather useful data and information. This can be done online, such as digital questionnaires, or offline, with questionnaires at the point of sale.

This set of data and information serves as a basis for making decisions and avoiding failed strategies. However, as customer behavior changes frequently, especially in times of crisis, it is important to keep the database up to date.

Knowing your customers, whether they are individuals or companies, means first of all knowing if they are good payers. There's no point in delivering your product or service and then defaulting. An essential tip to avoid falling victim to scams, fraud or simply default is to gain access to your customers' payment history.

To help entrepreneurs with this task, there are tools that allow you to check the CPF and CNPJ of your customers or business partners online and instantly. Before you complete the sale or carry out any other credit operation such as loans and financing, you will know whether you will receive your money or run the risk of default.

Checking your CPF and CNPJ is the starting point for assessing whether your clients are up to date with their obligations or whether their names are "dirty". But this isn't always enough to guard against potential defaults or scams. That's why you can go beyond this basic information and get to know your customers even better.

3. Reduce defaults and combat fraud.

To get to know their customers better, entrepreneurs can use tools that assess the Credit Score (or Credit Score), a technology that helps with credit risk management, and the Behavior Scoreanother tool that assigns a score based on the payment behavior of repeat customers.

Both the Credit Score and the Behavior Score help to reduce delinquency and combat fraud, but they have different purposes. To better understand how each works, let's take the example of an X store. 

O 4KST Credit Score uses our algorithm with data and information that the X store itself provides about its customer history. It then compares the profile of new customers entering the store with the profile of old customers, with the aim of trying to predict the behavior of new customers. This type of Credit Score is called customized because it uses information that store X itself provides. This has two advantages: it is cheaper than scores from credit bureaus (such as Serasa, QUOD and Boa Vista) and it is more accurate because it is based on the reality of store X.

The Behavior Scorealso based on the 4KST algorithm, generates a credit score, but with an important difference to the Credit Score. Behavior Score is used to evaluate repeat customers, as it generates a credit score based on the customer's order history, order frequency and payments. In other words, the technology does not compare the customer with others of the same profile, but generates the score based on their purchasing behavior.

Today, these technologies are increasingly sophisticated and precise thanks to machine learningan arm of Artificial Intelligence that creates systems, or predictive models, that are updated as information comes in. These predictive models can be applied to assess the "quality" of your customer base, i.e. based on the customer's history, they can "predict" whether the customer will honor their debt, loan, financing or purchase.

A powerful tool like this can be used in practically any field, from large industries to small businesses, including financial institutions. The same technology can also be applied in schools and universities to calculate the student drop-out rate, another way of guarding against possible defaults.

The algorithm is automatically fed customized data and historical information about your customers or students. In return, the system assigns a score to each of them. From this score, the entrepreneur is able to predict the behavior of his customers and, with this valuable information in hand, make the best business decisions.

4. Use technology to your advantage

Now that it's clearer how technology can help in the fight against fraud and defaults, it's easier to understand why these tools can be essential allies in making the right decisions.

There is no crystal ball, but today technology is capable of "predicting" the future with an increasingly high degree of statistical probability and, as a result, pointing out the best path to follow.

Collecting data from your customers and extracting valuable information from them is the most precious asset for companies today. That's why companies that want to be competitive in the market are increasingly looking at tools such as data mining or data mining.

From this set of disorganized data, it is possible to use data intelligence to refine it and transform it into information that makes sense and, above all, that can be used for strategic purposes. The question is: is your company already able to translate the data you collect efficiently?

Here at 4KST we offer the best solutions for transforming data into predictive models that will help your company grow, profit more and reduce expenses and revenue losses. Are you interested? Get in touch and find out more about our products for industries, companies of all sizes and financial institutions.