23/10/2020 Credit management
Christian Steiner

Brave New World: How digitisation affects credit management

Credit management, which is similar to classic accounts receivable accounting with purely administrative activities, hardly exists any more. Basic requirements such as monitoring compliance with payment targets and avoiding payment defaults are still relevant, but the range of tasks of a credit manager has expanded and is constantly changing:

Five-To-Nine instead of Nine-To-Five.

Modern working environments no longer stop at credit management. Part-time models, home office and distributed locations are no longer the exception. In addition, more and more companies are making use of shared service facilities, often abroad, which requires daily coordination. How can successful cooperation with colleagues be achieved when you are no longer sitting in an office all the time?

Permanent access to the relevant systems is therefore required. This must be possible from different terminals, from different countries in different languages. The need for mobile access to important credit management systems is also becoming more and more important due to the integration of field staff. The personal chat in the coffee kitchen takes place via digital channels, via messengers, video chats. There must be room for personal exchange as well as for the necessary compliance.

The expert is the team.

The ability to work in a team can be read in every job advertisement and the ability to work in a team in Credit Management means that one’s own expertise is also comprehensible to others. Modern work processes require lifelong (re-)learning and transparency is essential for this. Comprehensible decisions, assessments based on KPIs, but also being measured against KPIs are now standard practice. Nevertheless, good IT systems leave room for subjective assessments, which must be documented and therefore also comprehensible.

A lot helps a lot? The flood of information is coming.

Until recently, one of the responsibilities of a credit manager was to collect as much information as possible about a new customer. Information about companies (and sometimes also about people) can now be collected much more easily than before and in great abundance. Register information is provided free of charge on the net by web crawlers, and countless social media sites provide information about everyone and everything. Credit agencies are constantly offering new types of scores, with which the customer can be rated even better. Internal databases bulging with exorbitant amounts of data are just waiting to be evaluated. It is not the amount of information that is now the shortcoming, but the prioritisation, sorting and above all the filtering and evaluation of information. How do you evaluate last year’s balance sheet result compared to a current tweet about a delayed salary payment of the company?

Credit Management goes Amazon: 24/7 Credit Decisions with Instant Delivery.

If you can order a TV and a craftsman to be delivered to your home in two hours via the Internet, why do you have to wait days for a credit application in the shop? Can the credit manager really afford to wait for the annual publication of the business figures of a corporation? He may then be flying blind for 15 months.

The need for high speed is increasing enormously not only in processes, but the sales channels themselves are now also generating this challenge. So far mainly relevant in B2C business, eCommerce channels are becoming an important channel in B2B as well, requiring a particularly high level of responsiveness.

What the credit manager has to achieve in the digitalised future.

In the past, the credit manager knew his regular customers and the people in his sales department, but today he knows above all a powerful toolset for his work. He knows the algorithms of his credit rating calculation, his system-supported limit proposal and the special features of his trade credit insurance. With these tools, he is not only able to make a retrospective credit rating classification, but is developing into an independently acting analyst with planning responsibility, thus making an important contribution to business development and a healthy business performance of the company.