Credit Pulse

Right now, you likely have customers that are failing, but you don't know it. They pay on time, and say everything is going swimmingly. But a dangerous phenomenon known as the "cloaking effect" has been catching many credit teams off guard. This effect occurs when companies maintain timely payments on their obligations right up until they file for bankruptcy, effectively masking their true financial distress. In our latest post, we discuss why cloaking happens and what credit teams can do to overcome cloaking. ? #NACM #CreditCollections #CRF

The Texas Two-Step is a hot topic in credit! Our latest post breaks down the rules and case law for your benefit. #CreditCollections #NACM #CRF

Why should companies care about their credit teams? In a recent discussion with a credit manager at a textile manufacturer and distributor, we explored her responsibilities in overseeing creditworthiness and ensuring timely payments. This role is crucial in the manufacturing industry, where cash flow and credit management can significantly impact operational success. Effective credit management not only safeguards the company’s financial stability but also supports its long-term strategic goals. #NACM #CreditCollections #CreditManagement #Manufacturing#CreditManagement #TextileIndustry

?? Why do leaders and sales teams have a hard time understanding the value of credit managers? In this interview, we dive deeper into the challenges that credit teams face. #NACM #CreditCollections #CreditManagement #Manufacturing #CreditManagement #TextileIndustry

What does your credit policy say about your team? From Wild West to Fort Knox Your credit policy says a lot about your corporate credit team. Are you the "Yes to All" crowd, handing out credit like it's Halloween candy? Or perhaps you're the "Show Me the Money" team, demanding extreme diligence before approving a $10,000 credit line? The "Open Door" Policy Some companies operate with a credit policy that basically reads: "Got a pulse? You're approved!" While your sales team is doing cartwheels, your CFO is probably reaching for the antacids. The "Six Degrees of Separation" Approach Then there are those who rely on the "friend of a friend" method. "Oh, you once sat next to our CEO on a flight? Welcome aboard, here's the credit you asked for!" Because nothing says financial stability like a vague connection to someone important, right? The "Once Bitten, Twice Shy" Strategy After a few too many bad debts, some companies swing to the other extreme. Their new policy: "Trust no one. Demand payment in advance, credit for the few." They've gone from free-wheeling to Fort Knox fast. Finding the Goldilocks Zone The truth is, the ideal credit policy is like Goldilocks' porridge - not too hot, not too cold, but just right. It should match your company's growth ambitions and risk appetite. Too loose, and you're running a charity. Too tight, and your sales team starts blaming credit for underperforming sales. Enter Credit Pulse: Your AI-driven Credit Co-Pilot Now, imagine a world where you can confidently extend credit without feeling like you're playing roulette. Credit Pulse's AI-driven risk model is like having a crystal. It helps you spot negative and positive trending account weeks and months before traditional credit bureaus sound an alarm. These alarms are often way too late to act upon. With Credit Pulse, you can: - Sell more aggressively: Expand your customer base without your risk manager breaking out in hives. - Take on less risk: Identify potential issues before they become full-blown financial soap operas. - Stay ahead of the game: Get early warnings on risky accounts, giving you time to adjust your strategy or practice your "I told you so" speech. - Become a sales ally: Provide sales with info of quickly growing customers where expanding credit policies and growing sales are perfectly timed. Credit Pulse analyzes hundreds of data points to create a holistic business credit score. It's like having x-ray vision for your accounts receivable. So, whether your current credit policy is more "wild west" or "maximum security prison," Credit Pulse can help you find that perfect balance. #creditmanagers #creditandcollections #NACM

This week, I spoke with a credit leader from a manufacturer in the textiles space who seemed discouraged. Despite us already knowing the day-to-day challenges that credit and collections teams face, he seemed especially down. He told us, "My credit and collections team is vital to this business, yet we're seen as adversaries. We enable business growth by providing credit to customer that need it, but sales and my CEO only think we are a barrier to sales. We are under increasing pressure to make decisions faster with less information." His thoughts are extremely common among credit leaders, who often face an uphill battle in helping their colleagues and leadership teams understand the important of credit and collection teams. At Credit Pulse, we empower credit managers with tools and insights they need to not only do their jobs better, but also to elevate their roles. Credit teams see themselves as part of sales and want to be understood. We are on the lookout for new ways to help credit teams better communicate their value to leadership and grow their careers. #CreditManagement #CreditLeaders #CreditCollections #NACM

The panel discussion on AI's Role in Streamlining SMB Entity Risk' at the AI-Native Banking & Fintech Conference brought together industry leaders Moody Hadi (S&P Global), Will Tumulty (Rapid Finance), Steve Allocca (Funding Circle US), and Jordan E. (Credit Pulse) for an engaging conversation on how AI can transform business risk assessment. The panel explored AI’s impact on credit modeling and risk assessment, highlighting both the challenges and opportunities. While AI has the potential to drive more accurate insights and operational efficiencies, one of the biggest hurdles for banks and lenders is building the right strategy, discipline, and infrastructure to manage and maintain the necessary data inputs. It was a valuable discussion on how AI can improve risk profiling while also addressing the practical steps needed to leverage its full potential. Want to discover how AI can optimize your lending operations? Schedule a complimentary demo with our team today! https://lnkd.in/gcJJ8NVd #AINative #ArtificialIntelligence #Banking #Fintech

As the workday begins at Mack Manufacturing Solutions, a mid-sized industrial equipment supplier, the credit department buzzes with activity. Among the stack of applications on the senior credit analyst's desk, one stands out: a request for a substantial credit line from Apex Innovations, a company that seems promising at first glance. The Unfolding Story Apex Innovations had been in business for five years, showing steady growth with solid financials. However, something about the application didn't sit right with the experienced credit analyst. Trusting this instinct, they decided to dig deeper. Red Flags Appear The analyst reached out to their industry contacts, and a concerning picture began to emerge: - Several peers reported late payments and broken promises from Apex Innovations. - One contact mentioned a pattern of Apex placing large orders just before reaching their credit limit, then going silent for months. This behavior raised eyebrows, but it wasn't definitive proof of malintent. Digging into the Data Curious about the discrepancy between the reported financials and the industry chatter, the analyst delved into industry-specific revenue data. The findings were troubling: - Apex's reported revenue growth outpaced the industry average by an unrealistic margin. - Their claimed market share didn't align with known contracts and public tenders. - The company's reported profit margins were significantly higher than those of established competitors. The Character Question As the pieces came together, a clearer picture of Apex's character emerged: - The company seemed to be inflating its financial reports. The credit manager used Credit Pulse's revenue insights to see that reported revenue was far beyond the revenue analytics reported by banks. - There was a pattern of manipulating credit terms across multiple suppliers. - The owner's reputation in the industry was mixed at best, with some hinting at past ethical breaches. The Decision Armed with this information, the credit analyst faced a difficult decision. The potential business from Apex was tempting, but the risks were significant. They considered several options: 1. Denying the credit application outright. 2. Offering a much lower credit limit with strict terms. 3. Requesting personal guarantees before proceeding. Ultimately, the analyst opted for a combination of options 2 and 3, protecting the company while leaving the door open for Apex to prove themselves over time. This case underscores the importance of thorough research and networking in credit decisions. Without the insights from industry groups and careful analysis of revenue data, a potentially risky customer might have slipped through the cracks. It also highlighted the value of trusting one's instincts and digging deeper when something doesn't feel right, even when the surface-level information appears positive. #creditmanagers #creditandcollections #NACM

As a credit manager, navigating customer bankruptcies requires a careful balance of protecting your company's interests while maintaining valuable business relationships. Recent developments in bankruptcy law and practice offer both challenges and opportunities for creditors. Here's what you need to know to maximize your recovery and protect your interests: https://buff.ly/3UeAUzt #creditmanagers #creditandcollections #bankruptcy

Sarah Martinez had been managing credit for AdhesiveTech Manufacturing for over a decade when she got the call that would put all her experience to the test. BuildRight Construction, their largest customer with annual purchases of $2.8 million, had just filed for Chapter 11 bankruptcy. "I remember staring at my aging report that morning," Sarah recalls. "BuildRight owed us $387,000, with $142,000 of that from deliveries in the past three weeks. They had three major government contracts in progress, and I knew they needed our industrial-grade adhesives to complete them. But I also knew that one wrong move could cost us both the pre-petition debt and any future business." Sarah's situation is familiar to many credit managers in the construction supply industry. BuildRight's purchasing manager was already calling, insisting they needed another $50,000 in adhesives by the end of the week to keep their projects moving. He assured her that the DIP financing would cover all new orders. But Sarah had been through enough bankruptcies to know it wasn't that simple. "The first thing I did was check when each delivery had been made," she says. "I knew about the 20-day administrative claim rights under 503(b)(9), and that timing would be crucial. Then I called our bankruptcy counsel to review our options before making any commitments about new shipments." Sarah's careful approach paid off. By properly asserting AdhesiveTech's 503(b)(9) rights for $142,000 of recent deliveries, requiring cash in advance for initial post-petition shipments, and later negotiating critical vendor status, she managed to protect both past and future business. BuildRight successfully reorganized six months later, with AdhesiveTech recovering 100% of its 20-day claims and 72% of its remaining pre-petition debt—far above the 15% general unsecured creditors received. "The key was acting quickly but thoughtfully," Sarah explains. "You have to balance the legal protections available to you with the practical reality that your customer needs your product. If you handle it right, bankruptcy doesn't have to mean the end of a valuable business relationship." Sarah's experience highlights why understanding current bankruptcy trends and protections is crucial for credit managers. Here's what you need to know to navigate similar situations successfully: https://buff.ly/3UeAUzt #bankruptcy #creditmanagers #buildingmaterials