In this episode, we discuss how credit management has evolved over the last couple of years and what new challenges it may pose to growing businesses.
It is now more crucial for mid-market organizations than ever before to improve credit risk management, increase earnings, and improve efficiency in 2022 and beyond.
Furthermore, mid-market and SMB organizations with minimal cash reserves and erratic cash flow are most susceptible when the world returns to normalcy. We’ll discuss the factors including lack of transparency that impacts business to assess the creditworthiness of their buyers, ultimately affecting cash flow. Hence, in the true spirit of Thanksgiving, we bring you this ON-DEMAND webinar that addresses the challenges associated with manual credit risk assessment methods and how automation can safeguard the cash flow for mid-market businesses with reduced delinquencies and bad debt.
Madhurima Gupta: [0:03]
Hi, everybody. Welcome to Receivables Townhall and thank you for joining us today for our webinar. A few housekeeping notes before we get started, we’ll be taking the questions at the end of the presentation. So please feel free to put them in the comment section on the right side of your screen. We’ll also be sending a copy of the recording post-event. So please do not forget to register. For our session today, I have product experts from HighRadius who’ll be sharing insights on how to solve credit risk mitigation challenges at the office of the CFO. So without any further ado, let’s introduce you to our panel today. Our first expert is Neeraj Kumar, VP of product at HighRadius who is accompanied by Purna Chandra Pothana, who’s working as the Senior Product Manager at HighRadius. Let’s begin with the introductions. Would you like to go first Neeraj?
Neeraj Kumar: [0:51]
Thank you Madhurima. I am the VP of Product at HighRadius. I look at the credit product. Prior to HighRadius, I’ve got 20 years of experience in various domains like FinTech, HR, tech, and retail. I have helped build companies for an exchange trading platform, commodities exchange, a payment gateway, an omnichannel retail platform, and a job board in my past life.
Madhurima Gupta: [1:21]
Thank you so much for taking time today, Neeraj. Really appreciate it. And welcome to the show.
Neeraj Kumar: [1:26]
Madhurima Gupta: [1:27]
Moving on. Purna, I’d like to hear a little bit about your journey so far as well. So would you please like to introduce yourself to our viewers?
Purna Chandra Pothana: [1:34]
Right. First of all, thank you very much Madhurima for inviting Neeraj and me to this webinar. And, you know, a quick introduction about me. I am Purna Chandra, I have, uh, you know, eight and a half years of work experience, mostly across the financial products. And I worked across, you know, products ranging from, uh, you know, building products from the scratch to enterprise products, like HighRadius credit product. And currently, I’m working as a senior product manager at HighRadius. And I’m currently working on the credit product.
Madhurima Gupta: [2:03]
Thank you for those introductions. Now we’d like to get started with the presentation. And everybody should now be able to see a screen coming up, which Neeraj is sharing. So over to you Neeraj.
Neeraj Kumar: [2:15]
I’ll take you, uh, today in this webinar through the challenges faced by current organizations in their credit management processes. I’ll tell you, uh, why this has become so imperative to look at. The current processes as they exist and how to solve them and what are the benefits organizations can derive to change in these processes? So coming to the current challenges that organizations face, right? If you look at the current processes, most of the organizations follow manual processes right from the onboarding of customers itself. So currently most organizations use email and fax to get data from these buyers. What it does is that it creates a lot of unreliableness in this credit risk process. Plus it adds to the timelines. Apart from that very manual nature of this process, make sure that a lot of individual biases, uh, creep in, into the credit risk assessment process itself. Apart from that, we are not able to mediate in a system-agnostic way between the various conflicting interests of the sales versus the finance team for instance, right. So in effect what happens is the whole process becomes A, unreliable. B, it takes way more time than it should, and it creates a very bad experience for our customers. How do we go about solving? The whole problem can be looked at differently and be solved through the process of simplifying and automating the individual parts of their strategies, and assessment process. Okay. We can digitize the customer onboarding process itself. So no more of those emails and faxes. Bye-bye to them. Instead of, uh, you know, one-off credit risk assessments, we can have an automated credit risk assessment process, which can run on an ongoing basis for you. We can automate the management of block orders by introducing artificial intelligence based systems. And we can also provide a 360-degree view to our clients of their own customers. In effect what it would do is automate, digitize and simplify the entire process. The question that comes to my mind is why now? Today’s post-pandemic world has made it imperative for all our, you know, uh, credit risk departments to take a good, hard look at their processes. While the post point pandemic world has created a great economic opportunity, a growth opportunity, and if you look at the report by the national center for middle markets published in 2021, what we have found is that 39% of the organizations are looking at newer domestic markets and a good 55% of the companies are trying to introduce new offerings to their customers. So while the post pandemic world creates a lot of, uh, brings a lot of opportunities, it also is a very uncertain environment. Today we all are aware, that inflation is, you know, uh, rising rapidly, and with it will come a higher interest rate regime. A higher interest rate regime with uncertainty in the supply chain management itself, plus all the social-political upheavals. Like today, you know, the geopolitical wars that we are seeing around the world will create its own pressures on the businesses leading to possibly more insolvency. So it becomes tougher and tougher for organizations to assess the credit risk of a particular customer on an ongoing basis. Right? So today it has become really, really imperative for us to change the way we look at credit risk management at our organizations and change the way we handle it. If we automate digitize and simplify the entire process, it brings these four benefits to our organization- improves the bottom line, better compliances for you, increases the efficiency and the productivity.
So real-time credit risk management will lower your bad debt. It will also give you alerts on a proactive basis to better handle the credit risk of particular customers. It can also use artificial intelligence to assess payment patterns and to predict which orders need to be blocked, which shouldn’t be in all. It all will lead to a better bottom line and improve revenues. It will also lead to increased efficiencies in your organization. As per a case study by JJ Keller and Associates, we have witnessed a 50% reduction in credit review times through faster onboarding and accurate assessment of customer credit reports and auto-scoring of customer credit risk, and streamlining the internal communications, inside the customer organizing itself. Apart from that centralized repository of data also brings us a single-point view of the entire process and gives us an opportunity to be better able to comply through various regulations. And most of all, it leads to enhanced productivity at your organization. We have, for instance, a case study with Hackett Group, where we were able to reduce the customer onboarding time by as, as much as 67%. So in all, it’s a great deal to re-look at everything and move towards more auto automation and certification of the credit responses.
Madhurima Gupta: [8:15]
Thank you so much, Neeraj for walking us through the reasons why people should start looking at credit risk management from an automation standpoint. And to further this and discuss it in more detail, I’ll now have Purna join us. And Purna will walk us through the processes that you can automate to put your credit risk mitigation on autopilot. And the key highlights would be, you know, understanding how you can put your customer onboarding, credit risk monitoring, predicting your locked orders, uh, making effective decisions, and reassessing your customers’ risk from time to time on. So over to Purna. Please go ahead.
Purna Chandra Pothana: [8:55]
All right. Yeah. Thank you very much, Madhurimauh. Can we go to the next slide please, right? Yeah. So, uh, talking about, uh, you know, to start off with onboarding your new customers. So, as Neeraj was, uh, you know, rightly mentioning it. So there are like plenty of organizations which are still doing this, uh, you know, customer onboarding completely manual. So this process, uh, you know, would need, uh, you know, would require manual forms wherein, uh, you know, your prospective customers would have to fill in this information and then send it to your credit team. And they would have to, you know, enter all this information either into your ERP or some equivalent system. And, uh, you know, it requires lots of manual efforts. So HighRadius has come up with a solution called online credit application, which can be used in three different ways.
If you are already having a website, this online credit application can be completely embedded into your system, number one. Number two is let’s say, you already have an online form and we have APIs, which can be directly integrated with that, you know, credit application. And, uh, you know, it can extract information, what all you know is provided by your customers. And, you know, it can be given to your credit team for assessment. So it becomes relatively easier for your credit team. And number three is you can create new URLs, new webpages for online credit applications. And you can send across this online credit application URLs to all your prospective customers and to your sales teams also. And when I quote it as online credit application, it need not just for onboarding your new customers, it can also be very well..
So we have something called this multi-review online credit applications wherein, you know, you can do all sorts of, let’s say a credit limit utilization or an existing credit review. Sorry. Credit review on your existing customers. So all these can be pretty much supported by an online credit application. And also one more know, very important, uh, feature here is that, so let’s say all these online credit applications for your new prospective customers need not be always filled by your customers so they can be initiated by your sales team. And they can fill in all the information that they’re aware of, and then whatever the, you know, uh, the man information that only you, the, uh, the prospective customer would be aware of, they can, you know, your sales team can just quicksave this application and send it across, uh, to your prospective client.
So it absolutely reduces the manual effort. Number one. And the turnaround time for you also to, you know, respond on this particular application. And here if you look at it, So there are plenty of tabs, like general, uh, information bank and trade reference, and you know, various data fields. So all of these are absolutely customizable as per the customer’s requirements. And moving ahead. So, uh, let’s say most of your customers might not have you know, information at the agency level. So they might, uh, send you financial reports, you know, probably over email or, uh, send you as an attachment. So in that case, let’s say if a financial report has, let’s say 200 pages wherein the relevant information for you, may not be more than like 5 to 10 to analyze and, you know, to do a credit assessment.
So what our AI model does is it can actually select what all are the relevant pages. It can select what are other relevant pages and accordingly it can extract information using OCR techniques and all this information can be, you know, passed on to your HighRadius credit cloud product. And, uh, you know, it can be absolutely given in a consumable way to your customers. Sorry, to your credit team so that it becomes absolutely easy for them to analyze this particular information. Moving ahead, real-time, credit risk monitoring. So off late, in the last two to three years, we have seen that you know, post-pandemic and the post, uh, you know, Ukraine-Russia war, the markets, and the organizations have become pretty volatile. You never know what’s going to happen, you know, which company is going to file a bankruptcy tomorrow and you know, which company might be banned tomorrow. And let’s say, you know, you have 200 odd customers. So manually, you know, verifying, analyzing or reviewing each of, or monitoring each of your customers is next to impossible. You know in case you have like so many customers, that’s where the RTCRM, real-time credit risk monitoring comes into the picture. So let’s say if, uh, one of my, you know, one of my company, one of my customers filed for bankruptcy. So a workflow can be automatically created and get added to my work list so that, you know, my credit team will be notified about it, and they can take an action immediately on that. And just to take this one step further, just trying to automate it further, you know, let’s say, I don’t even want that wait time where, you know, wherein my credit team has to go through this particular customer again, reassess them.
So I can absolutely make, uh, you know, automate this particular process also. And let’s say if I receive a bankruptcy alert on a particular costume, then I can change their credit limit to zero, so that no further, you know, orders can be entertained until you know until my credit team takes an action on that. So this process also can be absolutely automated. And moving to the next one, higher confidence in decision making. So let’s say if you are the, you know if one of your prospective customers asks for a very high credit limit, or there is a, you know, high-risk customer. So you assess all these customers when they are coming to you for the first time. But, you know, in such a post-pandemic era, you know, you would have to approve, or rather you know, you would need multiple people to approve this particular request.
So let’s say in this particular example here I’m seeing that, you know, for credit limits which are more than a hundred thousand dollars, in such scenarios, I can use a user group. A group approval. So let’s say there are five levels of approvals. And in level three, I can have five different approvals who can approve this. And out of these five, I can make one of them a mandatory approval. So essentially what I’m trying to do is that I’m making sure that, you know, there are more people from my credit team who will assess this particular request and then take an action. So more than the number, you know, more number of people reviewing it. It’s absolutely a better decision for me, right. And moving to the next one, periodic reviews automatically, you know, triggers, uh, to reassess customers’ credit risk.
So, uh, you know, just reiterating the earlier point, you know, post-pandemic, you never know, you know, which customer, you know, what’s going to happen with each of this customer. So let’s say with regards to risk, you know, customers or, wherein, you know, there is high valued credit limit given to a particular customer. So in such cases, you can absolutely have a periodic review wherein, you know, let’s say, for example, taking the earlier example, let’s say for all the customers who have a credit limit, which is equal to all more than a hundred thousand dollars. So I can absolutely have a periodic review initiated for them once in every six months, so that I can make sure that all these customers are taken care of and reassessed every, uh, you know, every six months periodically so that I can actually reduce my risk. And this complete process is absolutely automated. And the first process that I want to call out here is proactively predicting orders. So this is one of the absolute features that you should be automating. So let’s say in the next three days, you know, what are the kind of orders that your customers would receive? So at the end of the day, all the orders that you would receive, you know, you would have to serve your customer. Like, uh, you do not want to have any sort of a delay in serving your customer. So what HighRadius product can do is that we can predict what will be the orders that you would receive in the next few days. So let’s say in this particular example, so here, uh, here, the predicted amount is 2000. So what could be the exposure after this new order?
So this can also be calculated and given upfront to you so that, you know, you need not wait for this order to receive in the next three days, then, you know, your credit team doing an assessment on that. And then you trying to, you know, doing an assessment again onto them, and then taking a decision. So you can actually avoid all the speed time and instead take the decision upfront so that you can avoid getting an order blocked. And not just with predicting blocked orders. We also support something called as the recommendation of blocked orders. Let’s say today, I have five blocked orders, I mean, five orders, which were blocked. What is the action that needs to be taken by a credit analyst or credit manager for that matter? So, uh, let’s say, the first three customers, they are very good at repayments. They have been repaying right on time. So I can, uh, you know, I can give a recommendation saying that you know, you can go ahead and release this order. Or you know, their business has been growing organically, so you can go ahead and increase their credit limit so that, you know, the orders do not get blocked. And the customer is a good repaying master. And on the other hand, let’s say the other two customers of you are not, uh, you know, they have been delaying, consistently delaying your payments. So in that case, we can probably, you know, give you a recommendation stating that go ahead and ask for repayment for this, uh, from this customer, so that, you know, you need not get into to a bigger risk. So these are the kind of recommendations that we absolutely provide. And, uh, just to summarize here, these are the file processes that should be absolutely automated by any credit that is, uh, you know, doing business. And not just these file processes, there are so many additional features processes that we have automated in the HighRadius product. So if you wanted to have a quick demo of it, you can go to the highradius.com website and book a demo there. And with this, I would hand over the control to Madhurima.
Madhurima Gupta: [19:45]
Thank you, Purna. Thank you for walking us through the five features that any company today should automate. And for that reason, we have HighRadius SaaS product for you. We are Order-to-Cash and AR transformation leaders, and we currently have more than 600 customers across the globe. We are 3000 employees strong and have over 450 million in growth funding. We were recently, uh, actually marked as leaders in the first-ever Magic Quadrant that Gartner released. That was just a couple of days ago. So very proud of that. HighRadius started this journey in 2006, where we were offering on-premise solutions. And over the years, we’d moved to cloud solutions. Then, you know, started building solutions that use artificial intelligence. We received strategic investments in 2017 and also in 2020 and 2021. And in 2021, we were actually evaluated at the 3.1 billion evaluation by our partners who invested in us. It was 2019 when we launched autonomous systems. And we believe that you know, we are your autonomous software partners for the office of the CFO. And on those lines, we have two product lines that we offer for automating the Order-to-Cash cycle in CFO’s office. That’s on the right side of the screen. So RadiusOne A/R suite is the mid-market first product, and we have another product called Integrated Receivables that offers end-to-end solutions to enterprises for automating their order-to-cash. Next slide, please. On this slide, we have our esteemed customers written down here for your reference. We cater to customers across different industries like P&G, GE, Asics, Danone, and more. So if you would want to partner with us to improve your order-to-cash cycle, treasury, and even record-to-report solutions, then please do send out a demo request on www.highradius.com.
Next slide please. And I also want to highlight that from 25th, April to 27th, April, we are hosting an in-person conference for the office of the CFO at Nissan Stadium, which is the home of Tennessee Titans in Nashville. So if you’re looking to, you know, find networking opportunities with 1000 plus finance and accounting professionals, then this is the place you should be at. This will be three days of learning and fun. When I say learning, there’ll be 50 plus peer-led sessions, workshops, and panel discussions that any person working at the office of the CFO shouldn’t miss. So please do register at radiance.highradius.com. If you’re interested and if you have any questions on this, please do reach out to us as well. And on that note, we had questions come in at different points, uh, on the chat section. And I’m now gonna take those questions for Neeraj and Purna. I think, let’s take a few questions with you first Neeraj, if that’s okay. So the first question that we have is, Can we integrate our company’s existing subscription to a credit agency to HighRadius? And if yes, how do you handle private companies’ data which are essentially the companies for who we do not have information present on the agencies?
Neeraj Kumar: [23:18]
Great. I mean yes, we are in luck there. We can continue using those credit agencies’ data through HighRadius itself. And to answer the second part of your question, any companies, any private companies for which these credit agency data are not available, we can upload those data through our self-service OCA form through an attachment. Plus if you want, you can even send it across in an email.
Madhurima Gupta: [23:51]
And OCA here is the online credit application. That’s right.
Purna Chandra Pothana: [23:55]
Yes. Right. Yeah. Just to add a point to that Madhurima. So, you know, not just with your existing partnerships that you have with the agencies, you can very well have agency integrations with multiple agencies at the same time. So let’s say you have five agencies, depending upon your requirement for a particular customer, you can extract information from, you know, let’s say two of your agencies. So all this is absolutely automated and absolutely possible.
Madhurima Gupta: [24:22]
The next question is when documents expire and companies have to do a lot of back and forth because of it, is there any way to automate this process and the email and sync over these documents with existing ERPs and companies?
Neeraj Kumar: [24:39]
Yes, Madhurima, This whole process can be automated and at various points of interventions, a template-based email will be sent out to the respective teams.
Madhurima Gupta: [24:53]
Great. Thanks for answering that Neeraj. The third question is on order prediction that I see here. So, um, one of our listeners has asked, can you please explain how order prediction works?
Purna Chandra Pothana: [25:07]
Right. So, order prediction, you know, uh, if we have to predict, uh, you know, what are the kind of orders that one of your customers would be receiving, we would have to obviously, you know, analyze the information of this particular customer in the past. So for that purpose, we would need at least two years of information, uh, two years of order history of this particular customer and the repayment behavior, the repayment history of this particular customer. So that we can pretty much predict what could be the types of orders that this particular customer could place, and at which particular day, which particular order could be placed. So we can you know, absolutely predict orders in such a fashion.
Madhurima Gupta: [25:53]
Understood. Purna there is one more question. The order prediction that you were referring to, will the prediction happen only for three days, correct?
Purna Chandra Pothana: [26:02]
Right, right. Just to answer that question. So we have, for credit product, we have different versions of it. So the enterprise product supports, uh, let’s say 3 days, 3 days of order prediction. In case of Autonomous, we support up to 30 days of order prediction, which means like in the next 30 days, what are the kind of orders that you’d be receiving for a particular customer that can be predicted. So 3 to 30 days is the kind of prediction that we can support.
Madhurima Gupta: [26:29]
Great. So that’s all the time that we have for questions folks. If you have certain other questions that you put on the comment section, we’ll reach out to you one on one and answer those questions, since we are at the top of the hour. So I’d like to thank you all for attending and thank you Purna and Neeraj for presenting today. And I wish all of you a great day ahead.
Purna Chandra Pothana: [26:50]
Neeraj Kumar: [26:51]
HighRadius Autonomous 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. Autonomous 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.