When B2B credit requests are made, most suppliers will look to payment history and traditional credit scores for answers. The commercial credit industry can be difficult to navigate, especially when you’re working with a new prospect for the first time. Approving the wrong credit request could lead to a major financial loss, and declining a company with a high purchase potential could wind up as a missed opportunity. Using a scorecard is an essential step in making credit decisions and the consideration process. Cortera recently launched Cortera DecisionsTM to aid businesses in making confident credit choices with simplicity and ease.
Consistency of Process
Large companies are at a disadvantage when it comes to internal communication. The policies and processes that one department uses don’t always make sense for others, so staying on the same page can be hard with everything else going on throughout the day. Having a credit decisions scorecard system in place guarantees consistency of process within the credit and finance departments. By taking the same steps in each transactional situation, credit managers, risk analysts and their counterparts will be able to operate seamlessly within the same guidelines.
Tailoring to Each Business’s Needs
Just like with consumers, there is no one-size-fits all approach to making credit decisions for businesses. Companies varying by industry, size, and revenue have different needs, goals and requirements. Using Decisions as your primary business credit scorecard provider gives you the ability to customize your algorithm and tailor credit decisions to your company’s specific needs. Each unique scorecard can be created and stored within the system for repeated use in the future. You can set up a different scorecard for each industry or each company size, etc.
Knowledge is Power
Determining credit limits in foreign land can be tricky. Knowledge and expertise are two things that can only come with time. By using an automated credit decisions scorecard system, the outcome lies in knowledgeable hands. Investing in the time and talent of a professional guarantees that risk will be mitigated at the highest level. It also eliminates some of the guess work associated with extending credit to a business for the first time. Knowledge about creditworthiness leads to continued growth within the marketplace.
Increased Cash Flow & Efficiency
There is one goal that is shared among nearly every business and that is increased cash flow. Using a business credit scorecard helps ensure this will happen by identifying potentially risky situations so that you know which companies to avoid. One size does not fit all in the credit industry, so every company needs to be treated differently and given different credit limits. Streamlining the process leads to unmatched efficiency and an increase in cash flow, leading credit and finance departments closer to their ultimate revenue goals.
Improving Hit Rates of Credit Decisions
Scorecards have the ability to dramatically improve decision hit rates by calculating the likelihood of a company to pay on time as well as personalizing the limits and terms. Since the history will be stored within your Decisions account, you’ll be able to look back at and measure the success of your aggressive vs. conservative decisions. Maintaining consistency, increasing cash flow and becoming an expert in each individual situation are all elements of improving decision hit rates. By using a business credit scorecard, you’re bound to get it right every time.