In Focus Commercial Credit
and trade groups to identify creditworthy and profitable prospects. The latest trends and management
expectations mean credit departments are required to think not only in terms of risk optimisation but to help identify business opportunities. This requires insight, clear analysis of historic data and the ability to make predictions — and this can only be done effectively with technology. Acknowledging the value this can bring
not only to the way they work but to the business, credit risk management teams are becoming a more data-savvy and embracing advanced tools like Artificial Intelligence and Robotic Process Automation (RPA) and moving away from manual excel-based work. Credit teams are spending more time
analysing their customer portfolios to truly understand what cash flows might look like to support working capital optimisation. They are now sought out as sources of insight and knowledge, becoming advisors for both sales and finance departments.
Automation is driving proactive credit risk management Access and automation is fundamental to running an agile and efficient credit management process. Cloud based technology more easily aggregates data from multiple sources to deliver better visibility on overall risk exposure across customer portfolios. Credit teams can leverage actionable
insights based on real-time customer credit data, macroeconomic fluctuations, payment trends to arrive at accurate credit decisions. Figure 2 shows the basic components of a
truly automated credit management. At a time where businesses need to remain agile, customer focused and be able to make
Figure 2: Key components of an automated credit management process
confident and informed decisions, automation can deliver the following value.
20% reduction in bad debt through efficient risk management Credit teams can perform proactive reviews based on internal factors such as credit utilisation thresholds. Real-time credit risk monitoring helps to continuously track macro and micro-level changes in portfolios. This fast-tracks ad-hoc reviews based on external bankruptcy alerts and negative payment trends. Better visibility of the overall portfolio risk helps to control bad debt reserves.
15% lower DSO through proactive collections Collectors can leverage insights from the credit department to prioritise customers based on payment trends, change in risk class, and blocked orders. Collectors can proactively follow up with the critical customers to recover faster, improving the overall DSO.
90% faster on-boarding leading to an improved customer experience Online credit application takes away the major pain points of manual onboarding. These pain points include to-and-fro with customers for missing data, aggregating credit reports, and validating bank references. Digital customer onboarding makes the whole process faster and allows credit teams to focus on risk classification and scoring and other important decisions.
50% faster credit reviews by ensuring better visibility on credit health Credit teams have 1000+ existing customers to review. Credit Cloud analyses agency data, financials, payment trends, and blocked orders. It can then automatically flag critical clients who should be reviewed immediately while automating reviews for low-risk clients.
The Credit department can prioritise these reviews to mitigate the risks, positively impacting the bad debt reserves.
Improvement in productivity due to real-time visibility into customer’s credit data Credit teams can spend more time on every critical risk evaluation. This is because essential data such as credit reports from D&B, Experian, financials, macroeconomic fluctuations reports, payment history reports, previous credit score reports, and credit limit utilisation is already auto-aggregated. This ensures faster reviews and transparent audit trail for executive visibility.
Renewed focus on credit is the need of the hour Credit management is the lifeblood of all firms, but it has taken a global pandemic to expose the cracks in outdated systems and too often a manual approach to risk mitigation. Innovative new technology solutions
extend the applications and value of credit risk management across the enterprise through a cloud-based technology platform, enabled with artificial intelligence. Cloud-based solutions offer the benefits
of reliability, mobility, and scalability while eliminating IT, data infrastructure, and upgrade costs. These solutions enable dynamic credit management workflows and process improvements that result in not only lower risk but improved response times, reduced costs, and better customer experience. The modern, technologically advanced
credit management process gives organisa- tions a proven ability to make quicker and more accurate decisions with real-time credit data. Its effects are real, immediate, and increasingly indispensable for any busi- ness looking to strive for cautious growth in today’s competitive world. CCR
Figure 3: Impact achieved with proactive credit risk management by two brands
February 2021
www.CCRMagazine.com
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