In much the same way as buy now pay later (BNPL) provider Afterpay (ASX: APT) has transformed the way consumers make purchases, Australian fintech Credit Clear (ASX: CCR) aims to completely disrupt the way organisations manage their receivables.
The company’s proprietary digital billing platform is using intuitive communication and payment strategies to change the way customers manage their Afterpay and other repayments.
It is helping organisations in Australia and New Zealand to achieve smarter, faster and more effective financial outcomes by offering customers a “frictionless repayment experience” which promotes paperless invoicing and statements.
Commercialised in 2017, the platform is based on the premise that consumers could be willing to pay their charges in full – or start to contribute towards a reduction of their overdue amounts – if presented with a simple solution to enable the transactions.
It is offered to clients as part of a receivables suite of services, allowing them to manage communications and payment arrangements with customers through an actionable and interactive digital and mobile interface.
Credit Clear chief executive officer David Hentschke said the platform could lead to better customer engagement and insight, faster payment reconciliations, improved cash flows and lower costs to collect when compared to traditional methods.
“Our technology continues to transform the receivables landscape through artificial intelligence, automation and smart analytics,” he said.
“Our digital solutions provide actionable and convenient two-way communications, resulting in reduced costs, improved debt recoveries and a superior end-user experience.”
The platform is currently utilised by over 1,000 clients from blue chip companies through to government departments and leading utilities.
As a cloud-based Software-as-a-Service (SaaS) platform, Credit Clear’s product can be readily transported to global markets.
“Other countries have the exact same issues with receivables management and engaging with their customer bases,” Mr Hentschke said.
“We are in late-stage discussions with organisations in South Africa, we have people finalising a go-to-market strategy in the UK and we plan to do the same in the US before considering other countries.”
The international growth plans may also involve acquiring local contracts.
“That approach could fast-track things by a couple of years,” he said.
“It would allow us to move quickly in new countries because there would already be established relationships with a client base, and they would understand the local nuances and regulations.”
Mr Hentschke believes consumer payment management is more complex than ever before.
“Twenty years ago, people had three or four monthly repayments to make but now, they have many more including gym memberships and subscriptions to streaming services,” he said.
“Some people are also experiencing genuine financial hardship as a result.”
Credit Clear’s digital platform aims to help organisations collect payments in a way that “empowers the customer” through the use of advanced technologies powered by artificial intelligence.
Revenues collected through the platform generate gross profit margins of over 90%, compared to approximately 60% for traditional letters and calls.
Mr Hentschke pointed to a leading Australian finance, banking and insurance client which has benefited from the technology when dealing with customers on third party motor vehicle claims.
“They are communicating with [their customers] digitally, utilising multiple channels to specifically target consumer preferences,” he said.
“They can ask questions and exchange forms seamlessly [and] there has been great engagement… our client is delighted with the initial results.”
Having achieved a 70% increase in revenue to $11 million in its first year of trading on the ASX, Credit Clear has an ambitious growth strategy which (somewhat ironically) revolves around the acquisition of the Credit Solutions debt collection agency in 2019.
Prior to the purchase, Credit Solutions was a consumer centric, full service agency which had been utilising Credit Clear’s technology as part of its core offering.
Bringing it under the Credit Clear umbrella has allowed for an existing technology platform to combine with a traditional debt recovery business, allowing for a “more holistic and cohesive” debt management solution.
“A lot of organisations have been doing the same thing for the last 20 or 30 years, particularly in receivables management,” Mr Hentschke said.
“Buying an agency has enabled us to build trust… we can introduce digital at the front-end in a very controlled way, and organisations know they have the backup of an end-to-end service.”
Receivables management represents a $2.5 billion per annum industry in Australia.
Traditionally, it has involved businesses and organisations sending their non-performing and “uncollectable” accounts to an external agency for third party debtor management.
While some larger companies are sufficiently resourced to offer their own version of these services, many rely on outsourcing components of the work to specialist providers.
Over time, traditional service providers have evolved their offerings to encompass additional support services at both ends of the receivables management spectrum, designed to diversify their method of collection.
In more recent years, technological advancements in communication and collections software have broadened the scope of products and services available to the market.
Mr Hentschke said the industry was benefiting from the adoption of technology to simplify receivables management, reduce consumer handling time and meet regulatory requirements so that the cost to collect is reduced and brand protection for the client is optimised.
Research by Canstar has shown the average Australian owes $3,925 on their credit card, plus an additional $21,200 in personal debt (excluding property loans), pointing to “a clear need” for a user-friendly digital solution.