A Vexing Dilemma: the Risks of Neglecting Customer Credit Analysis in Software

For C-Level executives in the order-to-cash software field, customer credit analysis is simply non-negotiable. Not using software to assess a customer’s creditworthiness is tantamount to skating on thin ice—which is to say that it’s a potentially perilous endeavor. Without a sound credit analysis system in place, companies risk having their receivables stagnate and their liquidity constrained.

Customer credit analysis serves many purposes. It allows companies to assess creditworthiness, weigh the associated risk, and price the products or services accordingly. If handled correctly, incorporating credit analysis in order-to-cash software can pay dividends while improving customer satisfaction and loyalty. On the contrary, neglecting credit analysis software can spell disaster for companies.

Lack of credit analysis software can impede cash flow by prompting customers to postpone payment due to fluctuations in their financials or disputes about product quality or delivery delays. Failing to secure customer payment terms can be particularly damaging for companies as neglecting secure payment terms can leave companies exposed to protracted accounts receivables, consequently inflating their debt-to-income ratio and impacting their ability to obtain credit from lenders.

At the same time, lack of technology can leave companies unable to capitalize on future growth opportunities due to over-reliance on manual processes to evaluate creditworthiness. Manual credit assessment methods are often slow and tend to be less accurate than software-driven methods. Additionally, without automated risk scoring, companies cannot procure new clients in an efficient and safe manner, as they typically do not have a realistic view of the company’s financial conditions which may shift overnight. Moreover, manual processes imply that companies need more human resources to perform the analysis, which canrepresent a significant overhead costs.

Every day, decision makers are presented with a bevy of options to mitigate the risk of not using software for customer credit analysis process in order to cash software. And indeed, software solutions abound today and many of them offer innovative solutions to streamline the credit analysis process. From cutting-edge, highly integrated solutions that seamlessly integrate with existing infrastructure to solutions tailor-made for each business, the options are nearly infinite. Solution providers are incorporating blockchain technology and AI to both automate the credit assessment process and-ensure greater accuracy.

While the risks of not taking the plunge into automated customer credit assessment are great, this is an area where technology can help companies to make smarter decisions and enhance their competitiveness. Indeed, those who take the plunge to secure the financial health of their organization are well-positioned to benefit from the many advantages of automated customer credit analysis software.