Serving the customer correctly based on the right insights.
In 1918, brothers Geert and Sippe founded the family business that we now know as Douma Staal. The company is located in the Frisian Sneek in the Netherlands. It started trading as an ironwork dealer, today the company focuses on the sale of steel products. The 33,600m2 company building has an enormous stock and computer-controlled drilling and sawing installations to serve customers within 24 hours. However, there are many challenges involved. For a look behind the scenes, we spoke with Marco Ringnalda, who is responsible for Finance and P&O at Douma Staal.
A growing company
Douma Staal is a well-known player in the steel industry. In 2019, it celebrated its 100th anniversary and was given the title of “royal”. And it keeps growing. The company employs more than 90 employees and a number of temporary workers. Transport is done by a permanent, external transporter. Every day, about 20 trucks are delivering orders quickly, to the approximately 1,700 customers.
Checks with new customers
In addition to regular customers, Douma Staal continuously receives requests from new customers.
“Before we deliver to a new customer, we first gather information about that party via a credit report.”
“Before we deliver to a new customer, we first gather information about that party via a credit report. We particularly pay attention to the payment behaviour of the customer, but the recommended credit limit is also important to us. To determine the payment conditions for a new customer, we make an assessment based on payment behaviour, the customer group and its background.”
If the payment behaviour and the credit limit are not sufficient, Douma Staal will adjust the payment conditions accordingly.
“The payment terms we adhere to are common in the sector. The group of customers with adjusted payment terms is small.”
A professionalisation of debtor policy
But Douma Staal does not only perform checks on new customers. In collaboration with Graydon, the company further professionalised its debtor policy in 2019.
“You cannot avoid data contamination due to changes in your customer base. For instance, if the legal form of a company changes, it is useful for us to know and, if necessary, to conduct a more thorough investigation. However, it is difficult to keep up with all these changes. That is why, last year, we placed our name-address-place of residence, next to Graydon’s data and cleaned up our relationship database. We want to repeat this every year. We had a match of 80%, which means that our data was largely up to date. In itself, we think that is still a fairly good score.”
A uniform approach and internal support
In addition, Douma Staal has enriched their data with the credit limit. “For this, we have compared Graydon's current limits to our own data. We have noticed that our own data on customer payment behaviour is often confirmed by Graydon's data. We have refined this further with the management, the commercial department and the finance department and together we have reached new limits.”
As a result of this joint assessment, a good relationship has grown between Finance and Sales. “Previously, it often led to incomprehension in Sales when Finance had to reject an application afterwards due to a credit limit. Initially, we were a bit more careful, and we would block an order more quickly in order to be able to perform additional checks. By doing the check in advance, the process now runs much more smoothly. The limits are now better suited to the customer's situation. This means that we have considerably fewer problems in the order process, the logistics process and the service. We want to be able to deliver within 24 hours. Any blockage hinders this."
Keeping flows going
The correct service of customers who place an order on a regular basis is of great importance to Douma Staal. “We ensure that our processes run smoothly. In this way we keep the payment flow under control, and we can also properly control the material flow. We see little change among our active customers.”
The professionalisation of the debtor policy has therefore had many positive effects for Douma Staal. Mutual understanding has grown, and delay or stagnation of orders is prevented in many cases. "Moreover, our customers now pay faster on average, because our DSO - Days Sales Outstanding - has gone down considerably."
Monitoring: keeping track of changes
In addition to the annual cleaning and enrichment of its customer data, Douma Staal keeps a close eye on the developments of a limited but important group of customers. “By putting our most important customers in the monitoring list, we can keep track of changes. For example, we receive notifications about changes in a customer's credit limit, payment behaviour or business form. Depending on the information, we can elaborate on this and take immediate action if necessary.”
“By putting our most important customers in the monitoring list, we can keep track of changes.”
“In the past, we have seen a customer go bankrupt, but still have orders placed on an entity that turned out to no longer exist. It is almost impossible to find out afterwards exactly how this works. It is therefore almost impossible to still receive the payment, but we do a lot of effort to limit the damage. We could have avoided this situation if we had received a signal earlier that the company no longer existed.”
Special situations and additional checks
There are several reasons for checking a customer more thoroughly. Douma Staal also uses Graydon Network incl. XSeptions for this. This visually stunning solution provides immediate insight into the remarkable situations that arise in business relations and in their network.
“If several companies hinges on our customer, then we also want to know about those units. For instance, is there another shareholder who we do not know? And where do the money flows go? If there is any reason to doubt the solvency of a customer, we will send one of our representatives over to also assess the situation on site.”
“In addition, we perform additional checks when we receive the signal that a customer's ordering behaviour is changing. Suppose, for example, that a customer suddenly purchases a lot more. Then that could be a signal that another supplier has decided to stop supplying. After all, customers usually have multiple purchasing channels. A change in ordering behaviour can therefore be a signal that something is going on. And for us it is often a reason to carry out an additional check.”
The professionalised debtor policy at Douma Staal is a success. In the meantime, plans are on the table to also implement changes at Fisher Edelstaal, which is part of the same group.
“With Douma Staal, we now have more than 90% clean data. Next, we have to take a look at how things are going with Fisher Edelstaal’s data. Uniform processes are important for the companies within our group, because we are financially responsible for both Douma Staal and Fisher Edelstaal. Fisher Edelstaal is located at a different site in Sneek and has its own logistics and sales department. But we strive for a uniform customer assessment and administrative handling of orders. And that also includes the preliminary phase. At Fisher Edelstaal, we talk about other volumes. DSO and payment arrears are on a different level, but it is nonetheless important that we assess and absorb risks in the same way. We are currently working hard on that.”
More information about Douma Staal can be found on their website: www.doumastaal.nl.