Credit management workflows facilitate automation of the process flows relating to credit data and decisions associated with them. By automating parts of the business process of extending credit to a customer, credit workflows reduce the risk of error, standardize a set of consistent practices, and enable tremendous improvements in the flow of information.

There are five essential elements that go into the modeling of an optimized credit management workflow:

1. Origination: Every workflow has an origination point ? an execution condition or a work function (also called a task/atomic workflow) that is necessary for the workflow to be initiated. It is used to specify if and when a given workflow should be executed. For instance, for a credit management workflow, an origination point could be a new sales order, a blocked order, a periodic review notice or a new credit limit request by an existing customer. When the origination point is triggered, the workflow is set into action and the subsequent workflow instances are executed, contingent on their respective constraints and requirements being met.
2. Information: Every workflow operates on a set of data or information (documents, forms, tables et al.) to be processed and transferred from one workflow instance to another. The information component assigns input and output parameters to single tasks and, hence, covers data dependencies between them. For example, when a buyer submits a new credit application, the information that is essential to carry out the next step of assessing that application is the application form with all of the relevant buyer information. Backup data and decision inputs (credit reports from rating agencies, credit bureau and trade groups, public financials, income statements, balance sheets, key financial ratios, and insurance details) to assess applications and for periodic reviews and inter-departmental correspondence for information and approval/denial of credit decisions are a few of the other information components of a workflow.Individual tasks can only be plugged together if the output of previous step is a mandatory input to the next step. This form of data dependencies is called data flow and is an important functionality to guide and control the flow of logical units of work associated with a business process.
3. Operations: This component describes the elementary operations performed by resources using the workflow. All credit management workflows require a certain set of actions to be performed at specific stages of the process. These operations could be to create, review, modify, or approve the information component that flows as an input of the given step. Assessing the credit application form details, reviewing external credit reports of the buyer, assigning a credit limit, initiating inter-departmental correspondence, approving/denying a decision, and modifying pre-assigned credit limits of buyers are a few of the operations associated with a credit management workflow.
4. Workflow Efficacy: Underlying improvements in the credit operations design and the empowerment of credit teams with structured workflows could drastically improve the accuracy of credit decisions made by the team. A credit workflow contributes to accurate and reliable credit decision making by enabling faster and easier procurement of rich input data from multiple sources and a platform that facilitates real-time collaboration between different functional units and respective stakeholders with less effort. This translates into process improvement at multiple levels which is reflected in improved KPIs and business metrics such as DSO, percentage bad debt write-offs, cash conversion cycles, and accounts receivable turnover.
5. Workflow Efficiency: Implementing accurate credit decisions is not the sole objective of the credit department. The timeliness of these decisions is an equal contributor to successful credit operations. By reducing the time between credit request and decision, a business and its customer both come out ahead. Companies stuck in outdated operations may eventually arrive at the correct credit decision, but it?s often too late to use that information optimally. For example, not leveraging cross-sell opportunities at the time of sale because the final credit decision is rendered later in the process is a direct dollar loss from the bottom line. Efficiency and expediency lie at the core of credit management workflows. They improve process efficiency and provide a framework that enables fast, accurate credit decisions based on dependable, up-to-the-minute information.