Using Customer Credit Risk In An Order To Cash Solution: An Executive’s Guide
CUSTOMER CREDIT RISK IN AR SOLUTION
Integrating customer credit risk solutions into order to cash (OTC) software can prove to be beneficial step in ensuring the receivables management of any company. OTC solutions vary from company-to-company and may include software for billing, collections, order processing, and report generation. Incorporating customer credit risk solutions into this existing OTC software provides an avenue for ease of access and seamless integration with legacy systems. This guide will discuss the advantages of introducing customer credit risk solution into OTC software, as well as the best practices involved in doing so.
Advantages of Introducing Customer Credit Risk Solutions
Incorporating customer credit risk solutions into OTC software may be wise decision for those who would like to reduce the time spent on pre-screening customers. By vetting customers ahead of time, the company is able to filter out invoices that are less likely to be paid and mitigate the risk of bad debt. By obtaining real-time assessment of customer’s creditworthiness, OTC decisions are easily made, with efforts towards minimizing loss from potential delinquencies.
Not only does the integration of customer credit risk solutions into OTC software reduce the overall time spent in processing invoices, but it also helps determine the financial stability of customers. This in turn can help identify the ideal invoicing model for the customer and determine an accurate payment due date. Credit assessments through customer credit risk solutions can also provide an alternative to traditional security measures such as deposits, making it easier and less burdensome on federal or small businesses.
Best Practices for Introducing Customer Credit Risk
To ensure successful implementation of customer credit risk solutions, there are several best practices that can be taken into consideration. First, it is important to identify the criteria that should be evaluated in risk assessment. This may include things such as due date, payment terms, legal status, risk rating, and more. It is also beneficial to use OTC software that integrates with other enterprise-wide systems. This helps to capture more accurate updates about customer creditworthiness, as well as the more timely delivery of invoices. Additionally, the use of specialized reporting functions in the software helps to facilitate pre-emptive decision-making and proactive management.
When evaluating customer credit risk solutions, it is important to consider the software?s capability to further automate the collections process. Software should be able to provide alerts and reminders, as well as account and credit history analysis. This helps to minimize exposure to risk, as well as automate billing, collections, and payment processing.
Conclusion
In short, there are several benefits of introducing customer credit risk solutions into OTC software. Benefits include but are not limited to reduced time spent on pre-screening customers, accurately assessing the financial stability of customers, and providing alternative security measures. In order to get the most out of customer credit risk software, it is important to carefully evaluate the OTC software being used and to utilize specific best practices. By taking these measures, OTC decisions can be made with ease and confidence, while also helping to minimize risk and loss within the companies receivables management.
Sources:
1. Dou, Joseph. ?Using Credit Risk Assessment in Collections Billing Onboarding.? Espresso, July 2020, www.espressosoftware.com/blog/using-credit-risk-assessment-in-collections-billing-onboarding.
2. ?Maximizing Efficiency and Reducing Risk with Credit Risk Solutions.? Experian Data Quality, 17 May 2020, www.experiandataquality.com/en-us/resources/white-papers/maximizing-efficiency-and-reducing-risk-with-credit-risk-solutions.
