13/10/2020 Credit management
Christian Steiner

Proactive. Strategic. Digital. How the credit management of the future works…Episode II

Let’s briefly go back to Episode I of our Credit Management hero saga. It’s late in the afternoon and you – the hero of our story – get a call from your CFO. He has just heard about a massive profit warning from one of your biggest customers and wants to know spontaneously from you as a credit manager how you assess the consequences for your company. What do you do and above all: what tools do you have at hand? In the dark era of credit management, you would have painstakingly and diligently collected all risk-relevant information manually from various ERP systems and presented it to your CFO in Excel, PowerPoint and/or PDF format. Time expenditure: enormous. Hero status: low. Penetrating power of your tool: wooden sticks rather than lightsabers.

In the new era of credit management, you would have proactively sent your CFO an updated risk assessment of your customer yesterday. Your modern digital credit management system, in which all risk-relevant customer and market information is collated and automatically processed, would have warned you precisely of this risk case and you would have done your guild credit as an important strategic early warning system. Time required: minimal. Hero status: Jedi Knight. Penetrating power of your tool: the concentrated Jedi power of the Old Order.

Now how do you draw the attention of your senior management to the impact that the use of outdated tools has on the performance of your credit management? Or looked at it another way: How do you convince your senior management that an investment in a modern, digital credit management solution with extra impact is worthwhile?

Making proactive risk forecasts

A widespread misconception among credit managers: the core function of their job is to keep track of their customers’ payment performance. There is no doubt that knowledge of the financial situation of individual customers is important in order to be able to evaluate an account. However, if you also take into account available risk-relevant market information, you can forecast payment bottlenecks before they occur and are reflected in the customer’s balance of payments.

Digital credit management solutions provide you automatically with a detailed overview of your customers’ payment status and all relevant information and in real time. This gives you a better overall view, helps you avoid payment defaults and thus contributes to the financial stability of your company. Additional added value: With your new overview, you can now focus your work on the really profitable accounts.

Use excellent customer experience as a competitive advantage

For the mass of collected data to develop its full impact, the information must then be processed and evaluated without errors. A customer must not be contacted about an outstanding payment if he has already transferred it a few minutes ago or is about to do so in the next few days.

The crucial point of a successful customer relationship is the much-cited customer experience. Customers who have had good experiences with your company are satisfied customers, are loyal customers, are regular customers. What many people still underestimate is the relevance of a smoothly functioning credit management system in shaping the customer relationship. After all, credit management examines the most intimate and sensitive area of a customer: His finances.

Take advantage of this opportunity to set yourself apart from your competitors through excellent customer experience in credit management.

A positive side effect for you: In a web portal, you can track and analyse your customer’s actions and make them more predictable. Your portal immediately reports when a customer has paid or can – based on their previous payment history – forecast when they are highly likely to pay.

Combined with the current market information that your digital credit management portal has automatically collected and processed on your customer, you receive a complete real-time overview of your customer’s payment performance and payment risk, enabling you to conduct evidence-based negotiations.

Maintaining and expanding business with existing customers

Losing dissatisfied customers is expensive. As a credit manager, however, you can have a significant influence on customer satisfaction. For example, use the customer and market data collected in your web portal and work out tailor-made credit limits for your customers – before they even need them. This can be particularly attractive for seasonal trade, for example. In close cooperation with your sales colleagues you can now proactively look after your customers and increase their satisfaction. With the help of your online evaluations, you can quickly and easily identify dissatisfied customers and take countermeasures in good time. The same applies to satisfied customers who would be prepared to pay more.

Approach new customer business strategically and proactively

Don’t leave your new customer business to chance, but use the penetrating power of your online credit management portal when searching for and identifying potential customers. With the help of extensive automated data analyses, you can identify desired customer characteristics and create clear new customer profiles. These templates help you to systematically and efficiently search for potential new customers and to address those customers who really fit your company.

As a credit manager, develop targeted strategies in advance to maximise credit limits for all types of customers. In this way, your sales colleagues can act as attractive contractual partners for potential new customers from the outset.

Modern credit management software can also help to increase sales: through more efficient, well integrated processes. In this way, as a credit manager you make a visible, verifiable contribution to the success of your company.

Make credit limit decisions in real time

Digital technologies increasingly influence the way payment processes are handled in today’s financial world. Real-time credit limit decisions enable contracts to be concluded on digital trading platforms and meet today’s customer expectations of uncomplicated contract processing. What is industry standard today may be obsolete tomorrow. The technological possibilities and thus the requirements of the customers are changing at an increasing speed. To ensure that your credit management does not lose touch, it must boldly embrace these changes and obtain effective technological support.

Modern credit management software not only improves the performance of your entire credit management, but also helps you as a credit manager to achieve greater visibility in your company. Digital solutions enable you to react quickly to market opportunities and to master the challenges posed by the rapid changes in our business world.