How to Better Detect Customer Repayment Problems: Account Monitoring Helps Mitigate Creditor Risk in Today’s New World

Given the current economic climate, business creditors must proactively analyze their commercial portfolios’ exposure, assess performance by account, segment those accounts by risk, and develop a strategy to manage risks. They’re also finding that traditional manual underwriting practices are inadequate. But there are automated solutions that can dramatically improve commercial portfolio risk management. That said, business creditors are wrestling with issues that are making risk mitigation increasingly difficult.

3 Business Concerns for Today’s Economic Environment

  1. Managing account volume — Before the onset of COVID, bad rates were forecasted for commercial accounts which was primarily based on past performance. Traditional scoring models were used infrequently, and they were mainly focused on portfolio reviews. However today, credit managers must expand their risk management toolkits by identifying more real-time ways to manage potentially thousands of impacted accounts.
  2. Optimizing portfolio management strategy — Credit managers are increasingly finding it difficult to set a baseline for current portfolio performance, segment accounts into risk categories, and monitor the majority of accounts that aren’t at risk.
  3. Immediately identifying high risk — Identifying accounts that have a higher risk has quickly emerged as a real challenge for business credit managers, which may slow efforts to adjust credit terms, introduce treatment strategies, or initiate a collection.

To effectively combat these concerns, commercial creditors must look for new ways to better understand their customers’ behaviors and status changes in as close to real time as possible. Only this way will risk be effectively mitigated within their portfolios while, at the same time, allowing for the flexibility necessary to help these small businesses make it. The large size of commercial portfolios means a significant amount of money is typically at risk, which should cause creditors to seek out an automated solution for portfolio monitoring in order to receive current data on the financial health of accounts.

Account Monitoring from Credit Plus

Credit Plus offers Account Monitoring which provides triggers on a variety of risk events and issues automatic alerts when a business account experiences a change. This automated process helps creditors proactively monitor emerging risks while managing high-risk accounts. Account Monitoring triggers fall into three categories:

  1. Score changes — The service monitors for credit score changes, sends alerts and assesses account changes when scores move beyond established thresholds.
  2. Legal filings — Commercial accounts are monitored for high-risk legal filings such as legal judgments, bankruptcies and liens and collection placements that indicate a higher probability of distress and future resiliency challenges.
  3. Damaging behavior — These triggers identify any negative comments on your accounts that are reported by trade contributors ─ for example, a customer not paying as agreed or has delinquent payments. These comments offer insights into unfavorable interactions your customer is having with other creditors.

Certainly, what will transpire in 2021 is anyone’s guess. But with Credit Plus’ Account Monitoring service, business creditors can better detect customer problems and act quickly to reduce risk. By using an automated service that provides real-time data, analyzes triggers and issues alerts, you can uncover changes in small business behavior early on so you can establish new terms that will be mutually acceptable and effective.

To learn more about our business-to-business credit decisioning solutions, contact your Credit Plus Account Executive.


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