In B2B risk management, the mantra “know your customer” is critical to protecting your firm’s profits. Due diligence is essential in determining what risk exposure you may be bringing to your firm and in mitigating that exposure through knowledge and insight, but how do you do this efficiently and effectively?
Due diligence: the essence of performance
Effective B2B risk management can be time-consuming and messy, requiring a deep analysis of businesses that may be unfamiliar to you or too complex to firmly comprehend during a standard risk assessment. While it may be tempting to stamp “decline” and walk away, high performing firms accept this as a necessary part of the job. The key is to find a more efficient operational model that simplifies the due diligence efforts and application review process while providing greater insights and access to the right data quickly.
Asking the right questions
To solve the challenge of workflow optimization in B2B risk management, you must first lay out how your due diligence process currently functions. How do you go from application to analysis and then to approval? How long does it take? What are the major bottlenecks, and why are they there? What tasks can you automate or eliminate to make the process smoother?
Starting small to build big
Many companies start their assessment with seemingly small but time-consuming tasks: Web searches, phone calls to references, and collecting supporting documents that are then read one at a time. These small tasks add up quickly and can contribute to a cumbersome and expensive process. If your firm’s due diligence efforts include these types of tasks, looking for a solution that integrates and automates delivery of this information may be a good place to start.
Alternatively, companies can work with a partner that has business process optimization expertise to help you identify your gaps and opportunities for improvement. Look for a partner that not only offers automation solutions, but has knowledge and experience in solving workflow optimization challenges for companies with similar needs. An understanding of how to integrate workflow improvements across an organization can highlight even greater gains to be had for your company.
Finding ways to improve risk assessment and credit decisioning inevitably frees up more time for companies to seek new opportunities more aggressively, which can lead to portfolio expansions and higher returns on equity.
To learn about other potential barriers to effective B2B credit risk management, check out Rethinking B2B Risk, Part 1.
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