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How to secure business continuity during the crisis and beyond with timely credit management

Paul Smitherman |

Not knowing the financial situation of your business partners is a risk. This risk has never been so prevalent as during the unprecedented disruption of the pandemic. Ensuring your invoices are settled in full and in a timely way can be a daunting prospect; staff numbers have temporarily reduced as part of government-supported schemes, supply chains are interrupted, and companies take more measures to protect themselves financially.

In Germany the timeframe for filing for insolvency has been temporarily extended to September. Although aimed at supporting businesses at this time, it can also hide the real financial situations of companies and make it difficult to assess the right risk level when doing business. Without insight of a company’s real financial situation, you could end up selling your products and services to an organisation which will not be able to settle your invoices. This will inevitably have a knock-on effect on the business continuity of your own organisation.

To secure your risk in such uncertain times, you will need to be responsive and gain full visibility so you can react quickly with the right credit limits and do business with the organisations that you have financial confidence in.

Four tips on how to mitigate your credit risk challenges

  1. Use actional insight for your order-to-cash processes

Actionable insight and efficient digitalised order-to-cash processes will provide valuable competitive advantage and could mean the difference between whether you survive or perish as a business.

That’s why we’ve partnered with some of the biggest credit agencies like Creditreform and Dun & Bradstreet to help our customers quickly respond to their own customers’ and suppliers’ changing financial behaviour. Through our credit rating agency partnerships, we deliver fully automated credit assessment data that enables customers to keep on top of daily changing situations and take the right action.

  1. Get fast and continual updates

Financial situations are constantly changing and you need access to the very latest credit risk data. Our software solution feeds credit risk data directly into your SAP system making the information immediately visible and highly available to the people who need it. Additionally, you can tailor your own monitoring process and risk evaluation based on the data you receive from the credit rating agencies, together with your past business experience of partnering with the customer or supplier in question.

  1. Create risk reducing processes

When you have all the latest information you can react quickly and are better able to protect your business by taking the right risk decisions. This avoids doing business with a company who you know can’t pay its invoices, which would result in financial loss to your organisation. With our software you can calculate the credit limit for all your business partners and introduce limits so that you control the financial behaviour and prevent unlimited purchase of your goods and services. If a customer or supplier is deemed too high risk, you can make a fast decision based on up- to-date information.

  1. Apply for credit insurance

Insurance should be applied for before your invoice becomes overdue. Apply early for credit insurance using the automated credit management tool. You can then use the other modules to resolve any remaining issues internally for dispute management, or hand over to specialists for a cash collection process.

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