21/07/2021 Credit management
Christian Steiner

Automation in Credit Management

We made progress, didn’t we?

When I started my career a little over 20 years ago in the export credit management department of a large tire company, there even was no Windows interface in our ERP system.  We were as far away from any automation in credit management as Christopher Columbus was from India. The poor colleague who was tasked to onboard, regularly heard me ask “What again was the name of the transaction for [insert any action you have to do in connection with CM and accounts receivable]?”.

I give her credit for taking it with a sense of humor and being patient until I too could remember everything – we are still good friends today! What we also had "back then" were long DSO, limit overrun and outstanding balance reports, printed out on endless paper, as well as thick customer folders in which the credit documents of our customers were filed. That was still good old credit management by foot! Sometimes even literally, when document L/Cs were carried from department to department for approval. As nice as that was, I turned my back on the credit management world a few years later.  

And today? Are we any closer to Automation in Credit Management?

Fast forward ~12 years, I started working as a consultant for SHS Viveon, a credit management software company. Wow I thought – a lot has happened, there even is special software for credit management! Wait – what? Was it really that a lot has happen? I have a few client projects behind me now. My job is to provide our customers with technical advice on the implementation of our software. What often surprises me, and sometimes even shocks me, is that credit management is still done on foot these days. In medium-sized companies as well as in large corporations, important credit management processes and monitoring are still carried out with the help of Excel lists, self-created mini programs, by E-Mail and, let’s be honest, sometimes not at all. How can that be, in a world where I can buy a refrigerator that automatically creates a shopping list for me? Shouldn’t it be self-evident that a financial tool as important as a company’s credit management should arrive in this century?

It is not yet self-evident, but must become so, because

1. Credit managers must be prepared for the new challenges brought about by the changed business environment

2. a Credit Manager’s time is too valuable to be spend on collecting information about (potential) customers, analyzing it, and then manually “waving through” 80%+ of the credit limits because they exactly meet the requirements of the credit policy (by the way: the story of Freudenberg Sealing Technologies shows how you can save 2 weeks of time per month this way)

3. the other 20% require the skills, experience and attention of the credit manager to closely monitor these difficult customers. And even with these 20%, it must not be the case that the credit manager is running after the required information.

Proactive credit management can be so easy when there is a well-designed, automated solution behind it. It is even nicer when you can adapt the automation in credit management to the risk awareness of the company and/or the respective industry.

Et voilá, modern credit management as it need to be.

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