A formal process for scheduling and performing credit reviews is necessary to maintain a quality credit portfolio. Shifting economic conditions, deteriorating industry forces, poor management, and a variety of other factors can increase or decrease the credit risk of a customer. Lack of reviews leaves a company at a greater risk of credit defaults.
This is the operating situation that one of our clients sought to address. The client is a Minnesota based steel processor with $500 million in annual sales. They have 400+ employees, and the credit team consists of 5 people. The work required to process 300 new credit applications a year left them with little time to conduct reviews of a portfolio of 3,800+ existing active customers. These out of date credit files led to a suboptimal credit portfolio.
Onboarding and Implementation
The platform was rolled out over a period of two weeks and required no client IT resources. The rollout included customization, credit process rules configuration, testing, and training of client employees. The Corporate Credit Manager was the main point of contact throughout the process. 3,800+ existing active accounts were uploaded to the platform and scheduled for review as part of the implementation process. Processing of new credit applications and updating of existing credit files began immediately.
Following the implementation, the client drastically improved management of their existing accounts and their credit decision process. Digital work queues and real-time metrics gave managers greater visibility into and control of their credit function. The proportion of unreviewed accounts dropped by over 80% over the first 6 months. The number of days it took to make a credit decision decreased by 67%. These improvements resulted in a higher performing credit portfolio and decreased days sales outstanding.