5 critical Credit & Risk Management evolutions in COVID-19 times

Discover what the most important developments are, why they are crucial in challenging times and understand why Creditsafe focuses its energy on these evolutions.

5 Mins

5 crucial Credit- & Risk Management evolutions

Find out what the key developments are and why they are crucial for credit and risk management in these challenging times

Assessing credit and business risks remains a challenging task, because of the still unprecedented situation in which entire industry sectors are affected and because of the financial support plans set up by governments to provide additional emergency assistance in an attempt to prevent companies from going bankrupt (immediately).

And yet, credit and risk professionals must assess, analyse and make informed decisions on a daily basis. (Credit) Risk management is a crucial aspect and is pushed to the top of many companies' priorities. A logical reasoning, since good risk management contributes to business continuity, stability and the sustainable growth of each organisation.

2020 and 2021 forced companies to start working and doing business in a different way. Today, companies need to be resilient, decisive, flexible in dealing with change, reinventing themselves and staying creative. Therefore we would like to explain what the key developments  are in Credit & Risk Management, why they are crucial for the future of every organisation and how Creditsafe puts the focus on these evolutions.

Chapter 1

Accurate company data for purchase & procurement

More and more companies are choosing for sustainable investments, which effectively contribute to the long-term stability and growth of organisations. Choosing the right supplier has never been more important than today.

More and more emphasis is placed on strategic sourcing, where the goods and/or services must contribute to the company's strategy in achieving its operational excellence and goals.

Believe it or not, but an uncertain period is a good opportunity to re-evaluate your supply chain. 

Is there a possibility that capacity can be offered in other countries? Can suppliers shift their services because of political, economic and other risks threatening the supply chain? What technologies do your suppliers use? In times of crisis, do they have an emergency plan or a business continuity plan? What is the content of their force majeure clauses? What is their long-term vision and how transparent are they?

Because in times of uncertainty, the economy is hit harder, it is therefore an excellent opportunity for you to check your list of suppliers. Given the complexity, it might be worth at least thinking about possible ways to diversify your supply chain and improve your alternative (contingency) plans, as it is unwise to put all your eggs in one basket.

Growing examples and issues leading to increasing evalutions (and costs) for procurement professionals.

Accurate company data to better predict future demand.

Accurate company data to better predict future demand.

Measure and analyse customer expectations for the next 3 to 5 years. Determine how critical the speed to market will be for them and for the industry. Choose company data, technologies and partnerships to support a more flexible and global network, so you can count on the right supplier in your supply chain strategy at all times.

Creditsafe can support you to deliver this 'business intelligence' using financial company data on more than 365 million companies in 160 countries. Thanks to our global network of 23 offices in 15 countries on 3 continents, our worldwide presence enables us to offer a world-leading service with expertise and support at local level. 

- Because we help companies change the way they do business.

Chapter 1

Data-driven technology

More than just adapting to a virtual environment, companies are looking for technologies that fit with the performance of their core tasks and business objectives. 

Business leaders and professionals are therefore opting for technologies that automate various workflows and processes in order to speed up decision-making, increase analytical accuracy and connect 'data intelligence' into their CRM systems and locations.

For this reason, choosing the right technology for the business executives is always accompanied by the right data sets to achieve this. It is therefore an absolute evolution to keep an eye on: being able to make decisions based on personalised data models. Because you can link your personal, organisational work experience and your know-how with objective data which you use to automate well-informed decisions.

Data is the new gold

Research done by the leading 'Bain Research' has shown that 53% of the best performing companies (such as Google, Amazon, etc.) use automated data flows to make better business decisions. Also, 41% of these companies make much faster decisions using this strategy (see graph).

These companies automate data in their business workflows and decisions, leading to:

  1. Improved productivity

  2. Reduced operational costs

  3. Increased profits

  4. And a more consistent policy application

Automated data models

It is that credit & risk experience and your know-how that we want to combine with 'data analytics', in order to develop data-driven decisions.

The credit, risk and sales departments of our customers use their own thinking patterns, experiences and policy applications; which is indispensable. A combination of the customer's know-how and the objective, up-to-date company data from Creditsafe are therefore a perfect recipe for success. 

Due to the very high expectations of purchasers, data automation is a crucial aspect for a successful organisation. Creditsafe has therefore made huge investments in the field of risk decision making and 'data science', allowing us to provide companies with automated investment and credit risk decision modules.

Our decision making model allows us to provide more streamlined solutions for companies who want to work with new partners, in order to achieve sustainable growth for the company.

Chapter 1

Efficient processing of overdue payments and bad debts

The tumultuous economic ecosystem has wreaked havoc on many companies and is testing their financial strength and flexibility. This means strained financial accounts, limited liquidity and overdue payments. Companies will have to adapt to varying credit terms, uncertain DBT (= Day Beyond Terms) and creative payment structures.

Therefore the credit management aspect is important to give the necessary stability, dynamism, flexibility and breathing space in times of turmoil for the entire organisation of the company. It is a building block to growth and stability for an organisation.

In order to make a risk assessment of your business relations, financial credit risk company information is an important (management) element in the business continuity of your organisation. Therefore, start with a full screening of your entire customer and supplier portfolio, to find out where (potential) credit risks lie. In times of turmoil and uncertainty, it is even more important to check EVERY new and existing business relation for their credit rating.

Good and up-to-date (financial) company data is key to making good business decisions. The credit score helps you in such a way that you can support your credit risk strategy and adjust it where necessary.

The credit reports from Creditsafe have the necessary elements to make a proper business decision

For example, Creditsafe's credit reports contain the necessary elements to make an informed business decision, such as credit scores and limits; legal events such as summons and bankruptcy data; financial data such as turnover, cash flow, capital and liquidity ratios; and other key financial company information. 

You can also check the different directors and view their other active and inactive mandates.

Chapter 1

Personalised and hands-on information & training sessions

Today, employers need to focus on efficiency and flexibility towards their employees. Teleworking has become the new normal in a digital environment. The proximity between colleagues can therefore be jeopardised, which can lead to inefficiency and frustration. 

Digital contact is therefore a very good opportunity and should be used to its full potential to support employees. Not only the daily review of tasks, but also additional training and information sessions fit perfectly into this digital, online framework.

The trend lies precisely in the fact that employees are requesting guidance and proximity from their 'home office', in order to be able to function as efficiently and flexibly as possible. The 'videocall' seems to us to be the right puzzle piece needed to stay connected.

Creditsafe will also focus on more training and solutions in digital practice. Therefore we will organise monthly webinars for our customers so that you are immediately up to date with the latest news and so that you can optimally use your solutions in practice (even on a fully personalised level).

It is our goal to help you move forward in achieving your goals.

Chapter 1

Customer Due Diligence - Know Your Customer

Customer Due Diligence, also known as the 'know your customer' principle, is a mandatory framework for some sectors and activities, but it is gaining importance in other companies as well.

Of course, it has always been important to know who you are doing business with. As of 2021, however, companies expect to need more time, energy and effort to get to know their customers effectively, how they work, who they are and where mutual expectations lie.

More and more companies are realising that a sincere and honest approach is becoming indispensable. Especially in the current economic climate, as teleworking has become the new norm and physical appointments with your (new) business partner are in decline or even impossible due to the current rules and procedures.

Companies are therefore opting more and more for digitalisation and automation because of this pandemic, which is changing the fraud landscape. Working from home and doing business online are the underlying factors because it creates the opportunity for greater C-level fraud, phishing and doing business with phantom companies.

60% van alle fraude gebeurt via spookbedrijven

Of the 1.7 million active companies in Belgium, about 20% have the potential to be a phantom company, which amounts to about 340,000 companies. 

Vigilance is therefore required, as 60% of all fraud occurs through such constructions.

Doing business with fraudulent organisations or individuals, without proactively checking or realising this, damages the organisation's image and the customers' trust. It leads to a loss of invested capital and non-payment for the delivered goods and services, which also threatens the financial stability of the proper company.

By conducting additional research on the trustworthiness of your customers (= Know Your Customer Principle, KYC check or compliance investigation), you gain a deeper understanding of the companies you work with. It will help your risk management to clearly identify your exposure to regulatory and reputational risks.

Our database is connected to that of LexisNexis WorldCompliance

Creditsafe has also invested heavily in this development, by connecting our database to the LexisNexis WorldCompliance database.

With Creditsafe Protect, customers gain access to global adverse media, PEP profiles, sanctions lists and enforcement databases through a single search. In this way, we simplify the complexity of extensive screening, improve the customer experience with streamlined onboarding, and allow them to build trusted relationships with new customers and business partners.

If you still have doubts about the current issue of compliance, just think back to the million-dollar order for facemasks by the then Belgian government of current affairs in March 2020.

Chapter 1

Resilience, stability & continued growth in turbulent times

In times of turmoil, we must be able to rely on the strategy and risk management measures taken. 

Therefore, we briefly mention again the most important elements to be able to show the necessary resilience in times of crisis to stay strong and to continue to grow as a company (and as an individual) in a sustainable way:

  1. Supply Chain

    Evaluate the decisiveness and flexibility of your supply chain and use accurate company data to better predict future demand.

  2. Full screenings at regular intervals

    Carry out a full screening of the entire customer and supplier base at regular intervals.

  3. In-depth checks of your business relations

    Check each (new) business relation for authenticity, credit rating and reliability.

  4. Continue to monitor and evaluate

    Monitor the financial elements, analyse them with the historical data and remain informed about the latest developments.

  5. Data Automation

    Automate data and workflows for improved productivity, secure profit margins, reduced operating costs and a consistent policy application.

  6. Take data-driven decisions

    Work data-driven and combine it with in-house know-how and policies to reduce human error margins, save time and drive efficiency forward.

  7. Personalised Key Account Management

    As a Creditsafe customer, you can always call upon the knowledge and experience of your personal key account for practical actions.

These crucial elements of credit and risk management contribute to your business continuity, stability and the sustainable growth for you and your organisation.

For many organisations, 2020 and 2021 were the start of a new way of working and therefore our organisation fits into your puzzle, as we  can support you in changing the way you and your company do business.

The secret of change is to focus all of your energy, not on fighting the old, but on building the new.

Socrates

Would you like to brainstorm together about the sustainable growth of your organisation?

Then book a virtual appointment with one of our experts for more personalised information