Enhance Your Credit Risk Management Process

by Rutuja shah Digital Marketing

With the aid of smart analytics, unconventional credit teams can help expand their impact on the success of their company. Read on to learn about how you can do it at your workplace.

Importance of using predictive analytics in credit risk management workflow-

Earlier, the credit function has been thought of as “the Department of No.” It was seen as a complicated area of finance to deal with. However, over the last 20 years, there has been an evolution in the way people perceive the credit management function. Credit and risk management professionals are making a conscious effort to move from their traditional roles into the role of a forward-thinking finance leader. Such forward-thinking finance leaders own the credit function but understand that decisions around credit and risk management will have broader organizational implications downstream in the sales cycle. The thought of “educated decision-making” provides more tools to the repertory of the credit professional.

Company financials always provide the greatest amount of insight into the company’s ability to pay their bills, deliver shareholder value and provide investment opportunities. At the end of the day, revenue growth is always at the top of their strategic plan. Broadening your view of the credit professional’s role and you will have a tremendous amount of information at your disposal in your quote-to-cash process. This information goes beyond just saying “yes” or “no” with some rationale for new sales opportunities.

It’s an opportunity to provide proactive information to your sales and marketing organization. Where are the upsell opportunities? Where are the cross-sell opportunities? Where is the inherent risk? Even beyond creating opportunities, sometimes being able to quickly ascertain information and make decisions is equally important.

Organizational Optimization - The crux of educated decision-making.

It is essential to train and educate credit/finance professionals to help them encourage organizational optimization, present financial strategy execution and facilitate sales. Once the organizational optimization is achieved, financial strategy execution becomes easier. While credit managers and analysts are not meant to sell, they can certainly contribute to the sales process by reducing sales cycle time.

Collection management strategy and its importance to a credit specialist-

Account's receivables are plausibly the greatest account on any company’s balance sheet. Therefore, it is important to be in a position to turn those receivables into working capital, that renders into a company’s ability to reinvest in its infrastructure

On implementing the predictive analytics to the portfolio, customers become the biggest portion of your exposure as they pay you. Both time and energy are better spent focusing on the high-risk portion of your portfolio.