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How Macroeconomic Data Can Improve Your Credit Decisions

Finance leaders are under pressure to become a more valuable partner to the business, pin-pointing where growth and risk exist, identifying top sales opportunities, and shortening the sales cycle. However, the challenge for finance leaders is to strike the right balance between capitalising on that opportunity and managing the risk associated with it.

So when your Head of Sales knocks on the door, excited about a potentially lucrative deal with a customer in a country you haven’t done business in before, you are naturally cautious. Your first instinct may be to turn to your risk assessment platform for intelligence on the customer, such as the size of their business, their trading history, financial track record, and payment terms.

But there’s something missing: intelligence on the operational risk of building customer relationships in the country itself. After all, you haven’t traded there before and you’re not familiar with the socio-political and economic situation. Indeed, at the back of your mind, wasn’t there a news item you read about the country struggling to meet its debt financing obligations?

The data and insights that deliver growth

According to Andy Craven, European Trade Credit Risk Product Leader at Dun & Bradstreet, organisations always need to protect against the downside. “Before traders, exporters, or investors step foot into a new geographic market, they need a comprehensive, up-to-the-minute profile of the risks and opportunities of trading in that territory. Armed with that insight, the modern finance leader can make the deals that will deliver growth.”

That’s not easy though. Finance needs answers to a long list of questions about the risk of trading in a new territory: For example, is the overall risk environment in the country stable, improving or deteriorating? What is the country’s current short-term economic outlook, including socio-political and economic forecasts? What are the recommended and minimum credit terms and usual credit periods, including payment delays with regard to local and foreign currency, exchange rates and on-going credit conditions? And more besides.

“The one thing finance leaders don’t have on their side: time”

Andy Craven, EU Trade Credit Risk Product Leader, Dun & Bradstreet

The typical approach

So what do you do? Most organisations typically approach the issue in one of two ways.
First, they ignore any additional country insight altogether, instead moving forward on an instinctive basis, using their existing knowledge of the country gleaned from media reports and other historical sources. Second, they typically turn to different, disconnected systems to understand the risk profile in the country: sources that not only take the credit/risk analysts a long time to analyse, but also potentially contain poor quality data.

“The one thing finance leaders don’t have on their side is time,” says Craven. “Organisations need to develop fast, prudent ways to evaluate and approve credit and collections – examining both company and country risk at the same time.”

A single view of both company and country risk

So what is the answer? A single view of both company and country risk in the same unified platform provides the actionable analytics and insight finance leaders need to evaluate risk and opportunities across the globe. CIOs, credit/risk analysts and others can quickly and effectively monitor a customer’s financial health and the improving, stable or deteriorating business risk environment they operate in.

“That holistic customer and country insight gives organisations the agility they need to manage credit risk, enables the sales teams to target opportunities more quickly, and moves closer to an enterprise-wide analytics strategy,” says Craven. “Whether the goal is to examine operational environments in a new market, monitor fluctuations in exchange rates, or assess changes in payments terms in a known business relationship – that single view is essential.”

This view opens up a world of possibilities. Besides examining customer credit and collections, finance leaders have the flexibility to identify the risk exposure associated with conducting commerce in a specific country, regional, or globally. They can conduct extensive research on countries with comprehensive and summary country risk reports – all through the use of interactive global maps. Ultimately, it gives finance leaders the opportunity to explore potentially lucrative new revenue opportunities that contribute to enterprise-wide growth.

Hoe verandert digitalisering de rol van de creditmanager?

Waarom zal er over 20 jaar dan geen credit manager meer zijn? Welke rol speelt digitalisering en de beschikbaarheid van data hierin? Processen automatiseren, machines – denk aan chatbots – nemen de plaats in van mensen. De credit management processen kunnen dan ook artificieel gedefinieerd worden en machinaal overgenomen worden. Hoe speelt de toekomstige credit manager hierop in?

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Hoe credit management voor groei en innovatie kan zorgen

Richt je op groei door een obsessie voor je klant te ontwikkelen. In een tijd waarin disruptie de norm is, moeten bedrijven nieuwe manieren vinden om competitief te blijven. Een ‘obsessie voor klanten’ is het begin van dat competitief voordeel. Door de toegang tot enorme hoeveelheden klantendata, is credit management het kanaal om te werken aan een obsessie voor klanten.

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