The Shift from Excel to Excelling in Credit Management

5 October, 2018
4 min read
Brett Johnson, AVP, Global Enablement
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What you'll learn

  • Discover 5 reasons why cloud-based solutions can provide efficient credit management.
  • Learn the benefits of using cloud solutions over spreadsheets.
  • Learn how worklist prioritization and automated data capture can enhance credit processing.
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Credit Management is one of the most critical stages of your Order-to-Cash cycle.  Launched in 1985 by Microsoft, Excel spreadsheets have undoubtedly been very popular and proved successful in managing credit operations for a long time. But do you really think that Excel is sufficient to deal with the increasing complexity of your accounts receivable process?

Statistically, Excel can only manage one million line items of data in a single sheet, which is definitely not enough to manage the volume of receivables any large organization deals with. This is only one of the limitations which creates an imperative for us to look at more purpose-built solutions for effective credit management. Let us take a look at the five ways in which such solutions hold an upper hand over Excel spreadsheets and could make your overall credit management process simpler and highly effective.

1. Manual entry of data

A key everyday task for a credit analyst is scoring and evaluating new credit applications. Today, credit analysts manually key-in the credit application data from paper and email, into spreadsheets. Not only is this a time-consuming process, but it’s highly prone to errors resulting from high-volume and manual data entry. This could be eliminated by a solution that automatically captures and stores all data from an online credit application.

2. Prioritization of Work

Credit analysts deal with different types of tasks in a typical day – ranging from periodic reviews to order releases. A traditional approach to this is creating worklists in spreadsheets and sorting them using a few select parameters to identify the high priority tasks. However, in addition to the manual work that this creates, the approach also lends itself to personal analyst preference, which could result in a deviation from the prioritization approach you’re trying to drive as a manager and what’s being used by an individual analyst. Specialized tools could help you by generating analyst worklists’ based on multiple factors – including account types, due dates, criticality and risk scores. These solutions do not just ensure that all analysts on the team are focusing energy on the right activities, but eventually, save the time lost in manual prioritization.

3. Static Nature of Spreadsheets

For an effective credit review, analysts need to log the information collected from different sources (such as Credit Bureaus, financial statements, and Bank and trade references) into spreadsheets and reference these sheets to compute the credit scores and limits. This is a slow and complicated process and could be eliminated by automation tools that dynamically aggregate information from multiple sources. These tools would not only ensure that the information captured is always the most recent and accurate but also let your analysts focus on arriving at the right credit decisions without any of the manual data entry.

4. Lack of Standardization

If you’re like other credit managers still stuck with spreadsheets, you may have multiple credit analysts on your team who use their own spreadsheets to track credit limits and scores across their portfolio of accounts. This could create a major issue in standardizing your credit scoring framework and strategy. Every update to your credit scoring policy requires a manual update for the spreadsheets being used by each of your analysts. However, a cloud-based credit scoring system, which is used by all analysts and administered centrally by a manager, could ensure that the rules, frameworks, and policies are consistently used by all analysts and can easily be updated without having to force-cleanse old spreadsheets and replace them with new ones.

5. Reporting Mechanism

While you could track and record credit health and performance in Excel with the help of charts and graphs, it is a difficult job that requires aggregating data from multiple sources each time your report has to be updated for the month-end review. Moreover, such reports tend to be simplistic and might not cater to the need of all stakeholders. Your CFO obviously would want very different visibility into credit health than an analyst who might need reports simply to track their personal efficiency and effectiveness. This would also include easy access to a mobile analytics solution and not have to wait up for these reports to be put together by the team each time there is a need. An out-of-the-box reporting solution that is always connected to all your data sources and has pre-built reports could eliminate the amount of work spent in reporting while allowing you to focus on the real value of reporting-generating insight.

Effective credit management is a must for any company. While Excel spreadsheets have been providing satisfactory results in this regard (at least for small-scale companies), the industry is increasingly looking at purpose-built solutions that address pain-points specific to credit management. At the end of the day, as a credit manager, your goal is to protect and control the company’s credit risk exposure – and not spend time experimenting with fancy spreadsheet macros and tricks.

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HighRadius Credit Software automates the credit management process, enabling credit managers to make highly-accurate credit decisions 2X faster and enable faster customer onboarding with 4 primary components: configurable online credit application, customizable credit scoring engines, credit agency data aggregation engine, and collaborative credit management workflow. Along with that, there are a lot of key features that should definitely be explored some of which are online credit application, credit information aggregation, automated credit scoring & risk assessment, credit management workflows, approval workflows, and automated bank & trade reference checks. The result is faster customer onboarding, better internal collaboration, higher customer satisfaction, more targeted periodic reviews, and lower credit risk across the company’s customer portfolio.

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