Rethinking B2B Risk, Part 3: Can Fast Response Times and Effective Credit Risk Management Coexist?

August 8, 2014 Michael Foster

When it comes to making a credit decision, reducing response time can also mean having a higher yield than the competition. So how exactly can you respond to customers faster while keeping risk at bay? While there’s no hard-and-fast answer that suits every organization, there are a few general practices that any creditor can implement with relative ease to help you achieve a higher overall portfolio performance rate.

1. Identify and eliminate bottlenecks

Begin by identifying where your credit review process, from approval to onboarding, is suffering from bottlenecks. Is there a point in the process that is causing friction and delaying either your ability to approve or your ability to gain real and meaningful insight into the applicant’s creditworthiness? By asking these questions first, you can determine what needs to be improved, and in turn begin to seek out solutions that work for your company.

For instance, a credit decision might hang on an applicant’s current debt to equity ratio, but maybe you have no way to analyze this information. You may need to identify an external source that has this type of insight and the analytical tools to understand how this history demonstrates the company’s creditworthiness. By recognizing the need to integrate this new data source to understand a company’s credit profile, you can overcome the bottlenecks that make extending credit so risky and time-consuming.

2. Automate the application process

When you look at your workflow process, you’ll probably discover what many leading organizations offering credit are discovering: One way that companies can differentiate themselves is through the expediency of their application processing and response time to the applicant. By automating the process through tools like standardized credit scoring rules and e-signatures, you can expedite the application process for your customers. This also simplifies things for creditors and customers while reducing the amount of paperwork customers are responsible for, attracting more applicants overall.

3. Embrace real-time reporting

Real-time reporting is one of the benefits of automating the once manual approaches to credit analysis that remain common in many companies. With an automated process, decisions can be made in real time, giving you the opportunity to deliver a credit decision to the customer at the point of contact and not days later, when the customer’s interest in the transaction may have declined.

A workflow to improve workflows

Companies that want to offer products and services on credit terms can minimize risk with due diligence. Fortunately, this process is becoming more effective and sophisticated with the help of innovative new technology solutions. These solutions can enable workflow and process improvements that result in not only lower risk, but improved response times, reduced costs and higher financial yields.

To determine if your company can benefit from these innovations, take three simple steps:

1. Evaluate your risk management process to determine if bottlenecks exist.

2. Consider whether parts of your process can be automated.

3. Asses the timeliness of your data gathering and decision making.

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