7 Ways AI & Automation are Modernizing Credit Management

Your credit management team members are important protectors of your company’s risk exposure, cashflow and overall financial health. But maintaining the delicate balance between providing too much or not enough credit to your customers is even tougher when your team isn’t properly equipped.

Traditional credit management methods bring additional difficulties to an already difficult job. Manual procedures result in time-consuming tasks, data entry errors and lack of real-time information. No standardized customer onboarding process means inconsistent credit evaluations. Limited visibility into customer information leads to reactive vs. proactive responses to credit limit overages and blocked orders.

That’s why companies that are serious about providing an excellent customer experience while protecting their financial position use modern credit management systems that incorporate automation and AI technologies. Keep reading to learn what automated, AI-powered credit management solutions do and how to choose the right one for you.

7 ways AI-driven automation improves the credit management process

A credit management system is a collection of tools and procedures designed to streamline and more closely control the process of extending credit to customers. Responsible credit management increases the likelihood you’ll get paid back in full and on time, minimizing financial risk and the need for long, drawn out collections actions.

Today’s credit management systems are equipped with the latest technological advancements, including automation and types of AI. Using Esker Credit Management as an example, let’s explore how a credit management system modernizes the process and turns the credit management team into decision-making, risk-managing rockstars.

Standardizes & secures customer onboarding

Onboarding a new customer isn’t just about setting up their account — it’s a vital touchpoint in the customer relationship that establishes secure, transparent communication, mitigates financial risks and ensures the customer’s success right from the start.

An AI-powered credit management system enables you to standardize your onboarding process. Customize and automatically send digital credit applications to new accounts — and track their status — from within the security of the platform so you can get new customers approved for credit more quickly and safely. Esker also integrates directly with major credit scoring providers, centralizing all the key data you need for credit analysis onto a single page for at-a-glance review.

AI-powered financial statement analysis

When credit teams are analyzing customer’s financial health, performing financial statements spreading and analysis can sometimes be quite challenging. The financial documents to analyze can vary significantly in format and detail, making the manual analysis complex. Then, extracting relevant data from lengthy reports and calculating financial ratios is also prone to errors.

Esker’s credit management solution allows credit teams to streamline this financial assessment process by automatically extracting key financial indicators from financial statements and calculating financial ratios. Users can upload financial statements into their credit management solution. The key financial indicators will be immediately extract from the document. Financial ratios are automatically calculated as well, and everything is presented in a consolidated form.

From the customer account, the financial information is available in a dedicated tab, and users can also ask Esker Synergy AI to generate a summary of the customer’s financial situation, highlighting the most important attention points and providing recommendations on whether to extend credit with a customer or not. 

Automates credit decisions

Here we get to the heart of credit management: How much credit should you give a new customer? Traditionally, this decision requires lots of legwork gathering the customer’s payment history, credit score, trade references from other vendors the customer buys from, and other financial data.

Esker’s Credit Management system directly retrieves risk data from multiple sources (including credit scores from credit bureaus) to give a customer an internal credit score. Then it automatically maps each customer to a risk category: high, moderate or low. Based on this information AI can suggest appropriate credit limits for the customer. And the best part? It’s all centralized and viewable on a single screen.

If the customer meets certain criteria, the system automatically approves the customer for credit. If they don’t, the customer’s case is escalated to the appropriate person for human review. It ensures every credit decision meets the requirements of your company’s credit policies, accelerates the decision process and frees up your team to focus on risker cases and customers.

Simplifies credit reviews & blocked order management

A credit decision isn’t a one-and-done situation. You need to periodically review each customer’s creditworthiness and credit limits to ensure they still make sense and to prevent orders from being blocked because a customer goes over their limit.

A credit management system automatically sends alerts for:

• Periodic reviews — it’s time to review a customer’s credit terms so nothing falls through the cracks

• Credit limits - an alert is sent once a customer is reaching their credit limit (which helps in predicting blocked orders). Alerts are also sent if a customer’s total outstanding invoices are higher than their authorized credit limit

• Credit scores — a credit bureau updates your customer’s credit score significantly

Beyond automatic alerts, the credit management system can prioritize tasks according to internal rules, so that the most critical events are always given priority. You get real-time insight into major credit events as they happen, ensuring any issues that could impact your company’s risk or customer relationships are reviewed in a timely manner.

Speaking of customer relationships, no one wants upset customers whose orders are blocked due to going over their credit limit. Esker’s Credit Management solution helps you manage blocked orders more quickly with options to release blocked orders automatically or after a dedicated review. Built in collaboration tools allow you to initiate conversations internally with sales or customer service staff or externally with the customer so everyone stays informed and on the same page. In addition, Esker’s Synergy AI can predict which customers may have their orders blocked before it happens so you can proactively review and update their credit limits. 

Centralizes customer & credit data

Clicking back and forth between different programs, systems and screens because the credit-related information you need is scattered all over the place is such a pain. A credit management system gives you 360-degree visibility into each customer’s credit-related data. Centralized on one easy-to-navigate screen, you’ll see:

• Credit risk indicators, such as risk category, risk exposure, credit limit and internal credit score
• Third-party credit data from credit agencies and credit insurance providers
• Current business situation, including orders, invoices, deductions, graphs and key business KPIs
• Payment behavior indicators, such average days to pay, payer rating and collections timelines
• Documents and internal notes, including invoices, credit applications, notes and communication with the customer
• Alerts for things like exceeded credit limits, blocked orders and scoring updates

Provides instant visibility into credit risk & performance

Because all of your credit management activities and data are centralized within a credit management system, it can offer helpful overviews of your team’s activities and results in the form of dashboards. Within Esker, you’ll see dashboards filled with real-time information and visual analytics displaying your overall credit risk (aging, customer risk categories, total exposure, etc.) and your credit management performance (automation levels, customer onboarding progress etc.). You can even customize your dashboards to include the data and reporting that’s most important to you.

Enables connection & collaboration

Esker’s credit management system allows you to keep all of your credit-related communication — whether internal or external — within the platform and associated with the correct customer account.

Connect with external credit partners without leaving the platform. Automatically retrieve key credit indicators and scores from major credit bureaus worldwide. And get real-time insured limits from credit insurers.

You can reach out to internal stakeholders, too. Chat with your Sales team, handle requests for credit checks on prospective customers or check key customer credit metrics. Work with your Collections team to access collections data during credit reviews or request that collections calls be made.

3 tips for choosing the right credit management automation solution

A credit management system is a powerful tool that can dramatically enhance your credit-related activities. Even better? There are plenty of solutions to choose from. Here’s what to keep in mind as you compare various providers so you find the best platform for your company’s unique needs.

Understand your business needs

Know what you want a credit management system to do for you. What are the pain points you want to solve? In what ways are your current systems failing you? Don’t forget about industry-specific requirements a solution should meet, such as regulation compliance.

Define clear objectives

What goals do you want your credit team to be able achieve using a credit management system? Think about where you want to be in terms of efficiency, risk management and customer experience metrics. 

Evaluate features and functionalities

Once you feel clear on what you need and want in a credit management platform, start exploring various providers. Look for systems that provide: 

• Credit risk analysis
• Automated workflows
• Integration with existing tools
• Real-time insights
• Future-focused technology, like AI-powered analytics, analyzing financial statements, calculating key ratios and providing suggestions based on the financial statements 

Maximize cashflow & minimize risk with Esker Credit Management

Bring the power of AI-driven automation to your organization’s credit management practices and start making credit decisions faster. Esker Credit Management: 

• Centralizes your data and customer information for greater operational efficiency
• Improves team productivity and morale by taking over menial, low-value tasks
• Increases visibility over processes and performance, highlighting areas needing improvement
• Improves customer satisfaction with faster, more transparent communication 
• Reduces the risk of high DSO, write-offs, late payments and blocked orders
• Decreases adverse risk exposure by better controlling credit risks

Let’s see a spreadsheet do all THAT.

Another neat thing about Esker is it offers both Credit Management and Collections software as part of a complete Order-to-Cash solution suite. So you can integrate your credit management and collections functions to increase both teams’ efficiency, maximize revenue and get greater visibility into both processes.

Your Credit team benefits from having access to internal collections data to better assess customer risk, and they can request collection calls with a click. Meanwhile, your Collections teams can use credit risk indicators to more effectively prioritize their collections efforts. It’s a win-win!

Why not see Esker Credit Management in action? Check out our Credit Management Solution Demo.