Grupo Aço Cearense: Growing sales by optimizing credit risk management
Explore Grupo Aço Cearense’s journey with SAP
Selling to customers who can pay in a timely way is crucial for business success. However, capping the amount of credit available to customers can limit sales potential. To balance credit risk with revenue growth, steel manufacturer Grupo Aço Cearense deployed the SAP Data Intelligence solution and the SAP Analytics Cloud solution for planning.
| Industry | Region | Company Size |
| Mill products | Fortaleza, Brazil | 2,438 employees |
reduction in credit analysis time.
increase in potential sales revenue.
IT Specialist, Grupo Aço Cearense
Growing revenues by understanding customers’ purchasing power
For more than 40 years, Grupo Aço Cearense has been a leader in the Brazilian steel market. With an annual production capacity of one million tons of steel, the company provides 16,000 customers across the country with products ranging from tubing, pipes, and coils to steel plates.
As the company grows, the effective management of credit risk is key to helping ensure that Aço Cearense does business only with customers that are able to pay for orders promptly. However, with a team of 25 credit controllers applying different credit rules for customers in different regions, the group’s approach to credit control lacked cohesiveness. Meanwhile, long waits for credit approval led to delays in closing deals, and a lack of transparency meant that salespeople were not always aware of the credit limits available to their customers.
To address this, Aço Cearense wanted to digitalize and standardize credit risk analysis and scoring processes. It decided to replace time-consuming, manual processes with a machine learning–based model using the SAP Data Intelligence solution and the SAP Analytics Cloud solution for planning.
Consolidating real-time updates from internal and external data sources
An established SAP customer, Aço Cearense chose SAP Data Intelligence as the data management foundation that would support its new credit risk management solution. Straightforward connectivity enabled the company to integrate SAP Data Intelligence with internal data sources, such as the SAP ERP application, as well as external sources of credit risk intelligence.
With help from SAP Services and Support, Aço Cearense set up business rules and an analysis model in SAP Data Intelligence. This enables the solution to calculate a credit score by evaluating the internal and external customer information against various criteria, including turnover, historical number of days in arrears, and the value of stock held.
Based on this score, SAP Data Intelligence generates a recommended credit limit for each customer. The solution updates the credit score and limit in real time based on the latest information from SAP ERP and external credit risk intelligence. SAP Analytics Cloud for planning draws on this information to make credit management reports readily available to the credit control team.
Achieving greater agility in credit risk analysis
With the new credit risk management solution in place, Aço Cearense can be more agile in its ability to understand and, where necessary, upgrade its customers’ credit status. Previously, it took around two days and the involvement of the sales manager and a member of the credit control team to gain approval for a specific deal. Now, automatic updates in Aço Cearense’s CRM solution mean that sales agents can immediately see any changes to credit limits, helping them understand at a glance the budget that a customer has available to spend.
Based on the credit limit information provided by SAP Data Intelligence, more than 80% of credit approvals take place automatically. This means that the credit control team now must respond only to the remaining 20% of credit requests that fall outside the limit. And they no longer need to manually consolidate and analyze credit risk information, saving time and resources for more-strategic tasks.
By reducing bad debt from 5% to 3% of invoiced sums, the solution has effectively paid for itself in just one year. In addition, by raising credit limits for 16% of customers with high credit scores, Aço Cearense has increased its potential sales revenues by R$54 million (approximately US$11.3 million).
Fulfilling sales potential through better-targeted marketing campaigns
Aço Cearense is now looking at how it can maximize the value delivered by its new credit risk management solution by providing marketing and sales teams with more in-depth reporting about the credit limits available to customers. These insights will allow salespeople to work more efficiently and prioritize their efforts by focusing on selling to customers that offer the highest revenue potential. In addition, up-to-date credit limit reports will enable marketing strategists to create targeted campaigns, informing customers of their credit limit and encouraging increased sales.
Meanwhile, the company is also considering other use cases for the technology. A key area of focus is the use of the solutions to improve stock control. With raw materials taking up to six months for delivery, it’s crucial that Aço Cearense manages stock levels effectively. The company is currently exploring how SAP Data Intelligence and the planning capabilities in SAP Analytics Cloud can help it achieve this.