Optimize customer risk management

In today’s economic climate, where bankruptcies are on the rise, General and Financial Departments must manage customer risks as effectively as possible, as customer accounts represent on average more than 40% of a company’s total assets. Customer risk management is strategic par excellence and requires reliable financial information. It requires the involvement of everyone, beyond the finance department, and above all a 360° view of customers in order to avoid the risk of non-payment and a rapid deterioration in cash flow. There are ways to limit the risks and evaluate the solvency of prospects or customers:

  • Balance sheet data websites,
  • Traditional collection management
  • Credit insurance.

However, they no longer meet the “reactivity” expectations of Risk & Credit Managers, faced with sudden financial deterioration and a crisis of confidence in credit insurers. Today, they must “take back control” of customer risk management by relying on the “customer knowledge” of the Information System, employees who are close to the “field” and by building their own customer behavior and payment observatory. Let’s decipher a 360° and personalized evaluation of customer risks!

Customer Risk : Free yourself from the limitations of “traditional” management delivered by third parties

Although the publication of accounting information is an obligation for companies, the balance sheet and financial data vary according to the websites consulted. As a proof of the difficulty to collect the most reliable information, a new internet service has just been created which compiles all the financial data of these websites in order to estimate them at best. The discrepancies can be so great, the financial ratios so contradictory that they make it impossible to analyze the economic and financial situation of a company. 

In addition, the information provided represents a past vision of the company, without taking into account the evolution of the economic situation and the current situation. No one can ignore the domino effect of a buyer’s failure, which leads to the seller’s failure one time out of four. Obsolete, outdated or even erroneous, the information provided cannot guarantee a relevant assessment of the customer risk. While credit insurance guarantees a more detailed analysis of customer risks and compensation in the event of non-payment, companies are subject to increasingly limited credit limits and drastic conditions. There is only one alternative for the company: to be its own credit insurer by equipping itself with the most efficient customer risk prevention!


Take back control of customer risk to gain in efficiency and reactivity

Can a company quickly and easily create its own safety net against non-payment? Without a doubt, we can answer in the affirmative if it implements the appropriate technological solution such as a resolutely collaborative receivables management software connected to the IS. The most efficient processes for collecting and reporting information involving employees at the heart of the company’s ecosystem. Stop the so-called complexity of collecting and using information. Credit Managers now have the tools and expertise to determine rules, based on algorithms, to create an observatory of knowledge and real-time observations of payments and customer behavior. They can combine internal information, bring it to life, and translate it into powerful statistics in order to better anticipate customer risks and make the “right” decisions at the “right” time. This 360° view of customers goes beyond flow and cash information, even if it is based on mathematical forecasts, a guarantee of an accounting vision. It ensures a better understanding of the customer’s history, fed and distributed by everyone in the company. Scoring, ceilings, overrun alerts, payment conditions, etc. are then managed in real time and according to the situation at any given moment. Accuracy of information, automated processes, community involvement, from the financial department to the sales department… these are the pillars of reactivity and efficiency in customer risk management. There is no more waste of energy and time in making decisions and carrying out actions.

In conclusion, customer risk management cannot be based solely on third parties or accounting elements. Today, companies must reappropriate the evaluation and management of customer risk, in all its finesse. In this respect, it is imperative that they exploit the wealth of information collected in the IS and the “field” experience of their employees. Technological solutions for managing customer receivables, such as ELOFISCAH, and the instructions for using the processes exist. Companies must only become aware of the savings and benefits of self-insuring against customer risks.