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Assuring business sustainability with Credit Management as we enter 2021

Paul Smitherman |

As the challenging economic conditions continue due to the pandemic, we face uncertain times as we enter 2021. Enterprises need more than ever to have a shift in mindset to proactively manage the impact of COVID-19 in their operations and workforce.

It is essential to continually focus on the activies that will ensure business continuity, but do you have one related to your debts ?

In this context most companies are now staying vigilant at their cash position, making sure payments are still being made or delayed and in this case struggling to find out for how long. Companies need effective digital solutions in place with sales and credit management aligning to cope with the impact of the pandemic such as mobile working and business disruptions on a global scale.

What trade insurers say

Since the start of the pandemic many governments have implemented several stimulus measures providing supplementary cover to global trade insurers such as Coface, Euler Hermes and Atradius to preserve business continuity. These measures include covering a high percentage of insurance claims by taking a share in the insurance premiums.

As a consequence credit insurance limits are being made available to a high number of companies that are seriously affected by the pandemic and have high insolvency risk. These measures that started to be applied at the beginning of the pandemic have been extended until 2Q 2021 in many countries across Europe.

For this reason, trade credit insurers expect a rapid increase of company insolvencies in 2021 since government stimulus packages are pushing the wave of bankruptcies for months.
With supply chains disrupted and the increase of bankruptcies, credit insurers have now no choice but to review and update all granted insurance credit limits with hard limit reductions and cancellations to mitigate losses.

Policy holders may benefit however from trade insurers increasing credit exposure to businesses related to the food and transportation sector as well as information technology, pharmaceutical and healthcare providers.

What credit information agencies say

Credit bureaus have monitored the pandemic closely during 2020 with particular response to support businesses to deliver updated credit ratings as well as a deeper insight into financial health of companies and their ability to overcome unexpected financial stress.

Reputable credit bureaus such as Dun and Bradstreet, Creditafe, CRIF Bürgel, Creditreform and Coface Central Europe provide financial information and credit scores on a global scale based on a long data history and finance statements generated dynamically during different economic and credit cycles, temporary market disruptions and soft information..

What companies can do now

Companies should access today more than ever the highest quality information provided by reputable credit bureaus, global trade insurers and get to know the impact it has had and continues to have on their daily operations with suppliers and customers. As such, enterprises will gain the ability to minimise effects on their own debt and focus on best quality customers avoiding credit deterioration and defaults.

Software solutions for a quick and digital decision making process in sales.

In order to minimise workloads, optimise outcomes of insurance coverage and align sales with credit management, SOA People offers the digital and mobile platform Credit Management Suite. It seamlessly integrates with the corporate financials in SAP and is directly interfaced with credit bureaus and trade insurers with global coverage in real-time.

SOA People Credit Management Suite platform gives you a risk status overview of all your business partners and the ability to forecast business failures in time. It enables credit check automation for prospects and customers with credit bureaus as well as the possibility to get credit insurance notifications and ‚just-in-time‘ updates directly into SAP.

Your company can now address risk impacts caused by the pandemic as we enter 2021 using credit rating and insurance information in real-time. You can evaluate risks and trigger procedures for internal credit limit decisions in order to avoid bad debts and remain sustainable in these hard times.

With the benefit of being able to implement the complete solution remotely and quickly, you can digitise your credit management process for a quick creditworthiness assessment with fully automated and manual decision-workflows in SAP.

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