Processing paper-based credit applications manually is a painful, unenticing and tedious process. Not only is this process inefficient, it also leads to low levels of job satisfaction due to its monotonous nature with a high potential for poor quality service delivery to customers. The manual approach to credit processing is fast becoming antiquated because of the increased need for companies to remain competitive in the ever evolving digital age.

Here are some of the basic costs associated with the manual process:


  • Information Storage and Access costs

In the manual process, the medium of information storage is primarily paper. Credit Applications, bank and trade references, financial statements, tax exempt certificates, personal guarantees, credit bureau reports, etc. are all examples of paper based documents in a manual process. As the volume of paper-based information grows, the cost of organizing, storing and accessing the paper-based information in filing cabinets grows. This processing scenario often creates delays in reaching a credit decision on an application with attendant consequences on delayed product shipments and potential customer dissatisfaction.

  • Information Exchange

Processing of credit applications often requires the exchange of information between the seller/creditor and multiple parties, including the customer, references, credit bureau companies, guarantors, internal sales/customer service, etc. In a manual process, such information exchange is done by faxes, emails and sometimes physical transport of information with zero capability for tracking and accounting for the information exchange progress.

  • Information Security costs

In a manual credit application processing scenario, sensitive credit and personal information is stored in unsecured paper filing cabinets. Such information is prone to easy access by unauthorized persons and exposed to destructive tempering without the possibility of physical backups. In these days of identity theft, it’s scary to have customers’ social security and credit card information stored in unsecured paper files lying around in the credit department. The mode of information exchange in the manual process is slow and creates costly delays in the Order-to-Cash cycle. The cost of remedying breached customers’ private information could significantly erode sales and hurt the bottom line.

  • Credit Risk costs

The overall credit risk of a company’s Accounts Receivable/Credit portfolio is a function of the quality of credit decisions reached by the credit department. The quality of credit decisions is a function of the accuracy of risk assessment performed on customers to determine their credit worthiness. A good risk assessment system depends on the collection of complete, accurate and objective credit information subjected to rigorous risk quantification analytics.  Unfortunately, in a manual based system, the tendency for inaccurate and incomplete credit information is quite high given that information is hand filled 90% of the time with no mechanism for information validation. In addition, manual systems lack the capability for rigorous analytical frameworks for determining credit risk from data aggregated from disparate sources. Credit risk cost erodes the bottom line of companies.

  • Customer Satisfaction costs

A happy customer places orders and receives products without delays. Delayed product shipments always results in unhappy customers.  Unfortunately, in manual credit application processing systems, delays in collecting and aggregating customer credit information are prevalent and often lead to long wait times for credit decisions and product shipments. The cost of customer dissatisfaction grows higher for companies with a manual credit process when the competition employs an agile and digital credit management process with faster turnarounds.

  • Working Capital costs

When product shipments to customers are not delayed and customers pay on time, a company’s cash flow is bolstered from sales. Good working capital is a function of a healthy cash flow.  On the other hand, when cash flows are hampered by delayed shipments and customer payment defaults, working capital costs grow as the company would have to borrow to augment its operating working capital/operational funding needs. Unfortunately, in a manual credit process, delayed shipments are prevalent with high potential for poor and inadequate credit risk assessments.


The credit department is on the critical path of the Order-to-Cash cycle. It’s almost imperative for companies to pay attention to the continuous and consistent delivery of the credit department’s functional goals to realize its Order-to-Cash corporate goals.  As the years go by, with more and more companies adopting digital credit management methods, the cost of processing manually has enumerated and will become increasingly detrimental to the overall bottom line of companies.


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