201509 CM September

DATA & ANALYTICS
BIG IS BEAUTIFUL
Sebastien Clouet, Marketing Director, Tinubu Square says
that credit managers need to be given the right tools for the
responsible job they do.
BUSINESSES, in order to survive,
and more importantly to thrive, have
often turned to finance departments
to find new, efficient processes to
steer them through financial difficulties.
Subsequently, credit managers are
playing a more central role, one that
proactively contributes to a company’s
expansion. They have moved from the
‘back office’ into a more prominent position,
getting involved in strategic decision
making and providing guidance to the
sales team and senior managers to help
direct business development. To prosper,
senior departmental managers are looking
to the credit management team to make
informed choices about levels of risk, how
much credit to extend to existing and new
customers, and how they can use flexible
credit terms as a means of expanding the
business for the future.
The change in roles was evident in the
findings of the Chartered Institute of Credit
Management Credit Managers’ Index
for Q1 2015. Not only does it illustrate
business confidence and an all-time index
high, it also reports a change in role and
responsibility for more than three quarters
(78 percent) of respondents.
Some 41 percent said they not only
had additional responsibilities, but were
also increasingly being called upon to
make strategically important decisions. It
is reassuring to see that the contribution
of credit managers is making a wider
impact. The same report, however, also
found that tasks such as managing credit
across multiple countries are only being
successfully automated by just over half
(57 percent) of respondents, which means
that 43 percent do not have the adequate
software to support them. And just under
a third still perform cross-country credit
management as a manual task.
ACCESS TO TECHNOLOGY
Lack of access to technology solutions
(in a profession typically characterised
by systems based on less than efficient
multiple mixed ledgers) can only hold credit
managers back. Some more enterprising
finance departments are deriving value from
a combination of all the data that they have
on their customers and the analysis that
can be drawn from it in terms of actionable
insight and greater efficiency.
Credit managers who initiate big data
projects are best served by focusing on
easy wins, such as the data that can analyse
trade payment behaviour, for example.
With an overview of the characteristics of
customer payments, credit managers can
then form a case-by-case view on credit
limits and access. They are firmly in control
and can bring ‘silo’ teams and departments
together, to collaborate and combine efforts
for optimum return.
It’s not just credit managers but all levels
of staff from sales directors through to CFOs
who can use the analysis derived from
big data to make better informed financial
decisions and encourage board-level
endorsement to extend big data projects
more broadly. But, because credit managers
benefit from shared data, there is a logic to
them implementing and driving the use of
these technology-based projects.
Big data has much to offer in support
of everyday credit management functions.
It can help to analyse debts and prioritise
persistently late payers so solutions can be
found for dealing with them and reducing
DSO; by monitoring debt collection records,
risk can be minimised; the integration
and streamlining of credit management
processes saves time and costs; it can help
to highlight the cost of late payments and
the impact on cash flow; plus decisions can
be made about ‘acceptable risk’ customers
as defined by enterprise policy, whilst
establishing insight into payment behaviour.
Big data and systems deliver real-time
analysis which allows credit managers
to make decisions based on hundreds
of variables that are always current and
by being in a stronger financial position,
companies can obtain short-term bank
credit.
Big data intelligence and the solutions
that work hand in hand with data arms
companies so they can assess customer
risks and focus sales efforts on the
strongest, high value opportunities that
deliver fast, full revenue recognition.
For credit managers fulfilling more
strategic roles, big data removes the
guesswork and helps to automate tasks
through technology. For the 43 percent
of credit managers who said they did not
have the software to support them, big
data could make the difference between
accurately identifying financial opportunities
or succumbing unnecessarily to dangerous
financial risks.
32 September 2015 www.cicm.com
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