Credit management as a function focuses on onboarding new customers, periodically assessing the customers, and releasing possible order blocks. The majority of these operations involve a lot of manual intervention. As a result of this, credit teams dedicate a lot of their time to clerical tasks instead of the core credit decisions. Let’s take a look at the significant challenges encountered by credit teams:
1. Slow, Paper-Based Customer Onboarding Impacting
Customer Experience
B2B credit teams have to onboard new customers across the globe, and they usually do it with credit applications. Most of these credit applications are paper-based, and customers often miss out on adding important business information. As a result, credit teams have to interact with customers multiple times to capture correct and complete information. Additionally, slow bank and trade reference verifications lead to a delayed customer onboarding process, impacting the overall customer experience.
2. Manual Credit Data Aggregation, Credit Scoring,
and Approvals
Credit teams have to log into D&B, Experian’s portals to manually download every single credit report. Additionally, they need to pull reports from regional credit bureaus to assess the risk. This is most common in regions such as LATAM or Europe. Pulling credit reports for every portfolio at a global level can be difficult. After downloading the reports, credit analysts manually review the credit ratings and financials and calculate the credit score. Credit approvals become slow and erroneous because of the multiple stakeholders involved, therefore increasing the risks involved.
3. Lack of Real-Time Visibility into Portfolio Risk Globally
With periodic reviews, credit teams struggle to identify at-risk customers. This was working out when the economy was stable, but periodic reviews are no longer a solution in the current turbulent economy. This is partly because credit teams face constant unpredictability while identifying portfolio risk, which might fluctuate at any time. With 1000s of customer portfolios, it’s difficult to regularly review and track the frequent changes in their credit profile.
4. Manual Review and Release of Blocked Orders
When a customer exhausts their credit limit, their upcoming orders are blocked. In such scenarios, credit teams often release those blocked orders based on Sales’ insistence, without any payment commitment – this is highly unreliable. Otherwise, they wait for the collectors to collect a partial payment, leading to a shipment hold for the customer – resulting in a poor customer experience.
So, now the question arises, How do you achieve a full-proof credit management system to tackle all these problems?
The answer to this question is by leveraging automation. In order to accomplish these tasks and tackle the complexities in hand, modern B2B credit management teams are becoming a lot more data-savvy and using advanced tools like Artificial Intelligence (AI) and Robotic Process Automation (RPA). They are moving away from paper-based analysis and relying on automation-driven insights to reduce bad debt and improve cash flows.
