An insightful summary of building the best-in-class credit scoring model capable of streamlining information, reducing bad-debt and predicting bankruptcy.
The ?cloaking effect?: The credit scoring model is not able to predict bankruptcy, financial stress or delinquent behavior. For example, Eastman Kodak is a company whose payment behavior to its suppliers did not reflect its financial condition. But Kodak filed for bankruptcy on January 19, 2012. The company was able to maintain a Payment Score around 8, which indicates no evidence of severely delinquent payment behavior until it went bankrupt. This is known as the cloaking effect. Along with this, high bad-debt, undetermined losses, loss of business opportunities, an increase in delinquent behavior/delayed payments, and a prolonged credit approval process are signs that your current credit scoring model has become outdated.
HighRadius Integrated Receivables Software Platform is the world's only end-to-end accounts receivable software platform to lower DSO and bad-debt, automate cash posting, speed-up collections, and dispute resolution, and improve team productivity. It leverages RivanaTM Artificial Intelligence for Accounts Receivable to convert receivables faster and more effectively by using machine learning for accurate decision making across both credit and receivable processes and also enables suppliers to digitally connect with buyers via the radiusOneTM network, closing the loop from the supplier accounts receivable process to the buyer accounts payable process. Integrated Receivables have been divided into 6 distinct applications: Credit Software, EIPP Software, Cash Application Software, Deductions Software, Collections Software, and ERP Payment Gateway - covering the entire gamut of credit-to-cash.