Magazine article Business Credit

Ever-Evolving Technology: Where Do New Platforms and Software Fit into the Credit Profession?

Magazine article Business Credit

Ever-Evolving Technology: Where Do New Platforms and Software Fit into the Credit Profession?

Article excerpt

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Through new software and improved technological advancements, the role of the credit manager has certainly evolved over time. The days of manual entry are falling further behind, with the focus shifting instead to automated services and doing more with less.

An emerging trend among credit professionals is the use of data and analytics to drive predictability of risk, said Christopher Rios, former director of finance operations for Dun & Bradstreet. An increasing number of credit professionals seek solutions that pull data quickly, which helps them make diligent decisions significantly faster. "It's all about how quickly can I determine risk?" Rios explained. "Are you [the customer] a high or low risk? If you are a high risk, what is contributing to that classification and how quickly can we determine next steps and recommendations back to the business? I think most credit and finance professionals want to move toward this idea of predictability and utilizing data in a different way."

Quick and accurate data results are highly important these days, especially as the global market broadens and international trade increasingly becomes commonplace. Credit management software provides the tools necessary to monitor and evaluate a customers creditworthiness, and most is now available through the cloud, commented Pam Krank, president of The Credit Department Inc. and speaker at NACM's upcoming Credit Congress. "That is a huge shift for credit managers who were hampered in the past by costs and roadblocks set by their IT teams," she said.

The shift also occurs in the daily tasks of a credit manager. Although credit professionals should continue to be knowledgeable about their customers background, they are less likely to manually review a company's financial statements. "I think it's very important that technology continues to evolve, but I think it is evolving in such a way where we won't see a ton of financial statement analysis-type work being done," Rios said. "It will be more in the way of broader, global risk to drive decision." And much of assessing risk will be done through credit management software. "How do you use this knowledge in a world where you aren't looking at financial statements anymore, and actually looking at models built off of custom data?" Rios asked. To some degree, a credit professional has to trust in the numbers produced by the software. "That's where I think people, seasoned or conventional, have a little more reluctance to adopt the new practices because you do have to put a little faith in it," Rios said.

Increased Technology

Companies both domestic and abroad are using computers more often than ever before, said Silvia Aguirre, chief certificate officer for Avalara and speaker at this year's Credit Congress. Her company focuses on tax automation and ensuring compliance. New business models, such as HomeAway and Airbnb, are opening the doors for automated services that did not exist five years ago. Larger businesses also use similar computerized technology to ensure compliance with government regulations. "There is certainly a lot of technology out there, and it's important that people keep their eyes open," she said, adding that some companies have "no clue" they need to collect documentation; automated services helps keep them on track.

Credit managers can use similar software to research a customer's payment history and assess its risk. "It's this idea that you can take a huge amount of data, and by analyzing the data you can figure out things you may not have otherwise seen," said Kirk Lundburg, president and CEO of Trade Technologies, Inc. and past speaker at FCIB events.

Before computers, assessing risk was based heavily on trust. Now the risk is more measurable. In the past, "you may have seen that the risk was there, but it wasn't so blunt," Aguirre said. With technology, a credit professional can now take advantage of the oldest database available and analyze the information collected to get a better, more accurate picture of his or her customer. …

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