The fundamentals of credit risk management software

It is commonly understood that for any team to deliver the best possible results, it needs to be equipped with the right tools for the job. The same is true for your accounts management and collections department. Once you’ve come up with a strategy to transform this department into a highly-advanced division of your business, the next step is to identify and acquire the equipment that they need to deliver quality work.

In this particular instance, the tool that your team needs the most in their corner is a comprehensive software solution that can assist in managing customer accounts and produce useful reports.

 With that said, there are many software solutions on the market that have account management functions. And, as you would no doubt agree, not all of these solutions can be equally useful to your team. If you do not choose wisely, you run the very real risk of spending a lot of money on a tool that never gets used – something that features very high up on the list of most business owners’ biggest frustrations.

Luckily, assessing how appropriate a given software solution is for the work that your finance department needs to do, can be broken down into three pillars. How well your chosen software solution incorporates the below functions into its system, ultimately determines its suitability for your team.

1. Automation

Automation is becoming increasingly important in running a modern business. It has been estimated that around 45% of the average company’s processes can be automated. This is because almost half of most business operations consist of repetitive tasks that require little decision-making ability or creative thought.

The same principle applies to your accounts management department. Most of your team’s time is likely spent capturing data, compiling reports, and other tasks that do not require higher-order thinking. Unfortunately, these tasks also sap a lot of your team’s energy, making it much more difficult to deliver quality results when they need to perform higher-order functions such as negotiate payments with customers or make strategic decisions. Of course, automating repetitive tasks also ensures much higher accuracy.

Make sure that the software that you choose offers automated reporting, bulk email or SMS capabilities, and automated data capture abilities as a minimum.

2. Analytics

I am still surprised at the fact that so many accounts management and collections departments do so little to study their own data in depth. For the most part, the vast majority of financial departments at medium and small businesses only use age analysis to assess the risk in their accounts.

An accounts management department is a data collecting machine by its very nature, and there is so much more information that can be gained from advanced data analytics - from more accurately predicting individual clients’ credit and payment risks to identifying red flags and even providing strategic information about growth opportunities for your business.

This is why a software solution with cutting-edge data analysis tools is an absolute must for finance departments as well as a business competing in today’s market.

3. Management

If you want your accounts management department to succeed, you must be involved in their daily operation. While most business owners would argue that they are too busy, you simply cannot expect good results from this very vital business arm if you are not there to assist and lead the team.

To this end, you need a software solution that makes it simple for you to oversee and control the finance department. Easy-to-use dashboards and reports (particularly system activity reports and financial summary reports) are absolute essentials to help you keep your finger on the pulse of your company.

As an aside, I would add that your software solution needs one more critical component – support. The fact is that even when you work to simplify your chosen software tools for yourself and your team, account management is a complex task. Therefore you need a software provider that backs up their product with training, technical support, and regular check-ins.

And just like that, you’re all set to find the best software for your team. Just remember the three fundamentals and don’t settle for anything less. Happy hunting.

For information on how to streamline credit risk management processes, contact us on 021 – 0014758 or visit the Jumping Fox Software website