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Managing A Growing Stream Of Credit Applications

Reviewing even a single credit application can be an exhausting and time-consuming process. And if you’re like most businesses nowadays, you’re probably being inundated with a flood of applications requiring countless man-hours to comb through for accurate assessment. Okay, maybe that’s a bit of a stretch. But conventional methods of handling credit applications is an old art that weighs down on employees who may already have other, time consuming tasks. These often create bottlenecks when juggling new clients or customers. While we are still one step short of having the credit applications organize and review themselves, there is credit risk management software that can greatly streamline the process.

What Does Credit Risk Management Software Do?

The primary function and benefit of this type of software is that most of those time-consuming but necessary steps in the credit review process are able to be automated. These may include certain routine decisions as well as a number of analytical activities. Basically, the software does all of the “busywork” and allows employees to focus their efforts on more complex analysis and transactions.

Does It Actually Work?

A case study of U.S. Energy Services shows how credit risk management software works. U.S. Energy Services is a leading energy management company managing an impressive $5.3 billion in energy transactions a year. During the global economic crisis, U.S. Energy Services took the lead in energy management while many small companies struggled to stay afloat in the turbulent waters of recession.

But the U.S. Energy Services faced some difficulties of their own. They needed a practical, quick, and efficient way to measure and assess the fiscal standing of smaller companies. Their manual credit application review process was cumbersome and far from perfect to meet growing demands. With so many clients, U.S. Energy Services needed to implement a standardized method for assessing credit risk. That’s when they began using credit risk management software.

Integration of this software into their pre-existing company financial infrastructure allowed U.S. Energy Services to formally review every single customer, effectively minimizing their risks in an uncertain economic climate, establish formal credit lines, and execute regularly scheduled reviews. Before implementing the credit risk software, U.S. Energy Services completed less than 25 annual reviews on average. That has changed quite dramatically since incorporation of the software; they now perform more than 300 reviews annually.

Common Benefits of Using Credit Risk Management Software

U.S. Energy Services’ success is not an isolated incident. There are countless businesses in a variety of industries that have realizedthe advantages conferred by using this type of software for evaluating companies and clients.

  • Central Location. Instead of scouring employee offices or the company computer network for necessary customer files, they are all located and easily accessible in a single location. You can also input and store additional data at any point.
  • Standardized Processes. Standardization is so important because it engenders consistency. This includes consistency in decision making, timing, planning, and execution of reviews.
  • Scoring Models. Having scoring models that are customizable means you’ll be able to make much more accurate credit judgments, minimizing losses.
  • Automation. An automated workflow creates an environment conducive to efficiency and productivity by eliminating redundant, time-consuming manual work. It also allows you to exercise optimized control over your total operating costs.

As the case of U.S. Energy Services illustrates, using commercial credit risk software can be a great benefit to companies that are struggling under the heavy load of credit applications.

John Briland is a part-time writer and full time car and motorcycle enthusiast. When he isn’t busy sprucing up his car, John enjoys writing and watching movies (mostly comedies). Also being a social-media expert, John works with various companies to produce quality content for their online followers.