7 Steps to Capitalize on the Power of Your Data

Credit2B is always looking for ways to show and enhance the value of credit practitioners within their organization. At the core, you are making a decision about financing a customer sale – this is no different from a banker trying to lend or an investor trying to take an equity position. The only difference is the terms of your transaction are over a shorter cycle. When your organization makes a statement that every customer is a long term relationship, your credit decision needs to take the form of a longer term decision, spread over “many rounds of short term financing.”

Probably the most important part of your decision is to know the pattern of payment behavior, allowing you to predict the likelihood that future receivables will be collectable. You also need to make this decision over a very large number of customers, so strong data management is of the utmost importance. Your customer aging data is a powerful asset and can make a sizable, positive impact on decisions if deployed in an optimal way.

Here are the major ways to leverage power as a credit practitioner:

1. Define a strong credit policy as the foundation:

Allow yourself to build a credible basis for gathering information. Start with elements that are critical to buyer risk in your industry, align your sales and finance teams around what you need to track and identify risk and then work with your internal and external technology partners to define the criteria and workflows associated. Key to this is identifying the best internal and external data to make informed and consistent decisions under a uniform credit policy. Revisit this policy to ensure it was actually delivering warnings on companies that ended up giving you trouble.

2. Defining a credit process for using your data better:

Your own company’s receivables data, information from your peers and third party data can prompt you to change a credit decision and alert you to reconsider your exposures on different accounts. Starting with the multiple sources, build a set of criteria for decisions and alerts consistent with your credit policy. For example, if days slow goes beyond your per-determined threshold and the rating on the business is in a moderate risk category for prior periods, you may cut the credit line and have an offline process aligned with your sales rep. Several workflow solutions provide smart and simple ways to set and automate these decisions and integrate directly with your enterprise wide systems.

3. Spend time with IT:

Across the board, credit departments consistently under-utilize their IT departments. Extract the optimal elements from your enterprise finance system, and work with partners or external consultants to ensure you have the ability to extract the data when you need it and deliver it where you need it. There will always be challenges for you to overcome, but working with IT and learning from past experiences are the best way to handle these problems. Using a third partly tech vendor can easily help bridge the gap that is often present between credit and IT departments within the company. Going beyond the obvious aging balance for receivables there are other data elements that can be easy to extract like Highest Credit, Average High Credit, First Sale Date, Estimated Days Slow or Average Days to Pay metrics.

4. Review payment experience and metrics against your major peers:

You can review metrics in either a credit group or on a real-time trade reference exchange. These reviews ensure you have a consistent way to continuously watch your payment metrics against your peers, both at the account and portfolio level. Drive a best-in-class benchmark that compares your float against every other portfolio of your industry peers. What lessons can we collectively share with each other? We know of one major global food company CFO that uses this to explicitly increase shareholder value by benchmarking through peer comparisons of receivables and payables data.

5. See something, say something:

We owe it to each other to use a process established by our credit groups or a similar platform to identify issues and pass them along to our peers. This process can be enhanced by letting a system track and relay such changes to your credit group or network members. No matter what situation you are in, anti-trust should always be at the forefront of any thoughts or discussions. One way to ensure anti-trust laws are not violated is to be consistently trained on anti-trust by lawyers with relevant backgrounds and to ensure that the third party system or process you use has gone through a similar process and assessment.

6. Use your peer data experience across a mix of industries:

One of the best ways to represent the diverse nature of your business which in this day and age is cross-industry is to be able to source intelligence from peer segments that can provide that basis. This expansion of your network will help expand to overlapping industries that you may not consider your direct market. Remember – widening your sources of peer intelligence is critical to those exposures in lesser known markets and industries (e.g., a shoe company client of ours got value from joining a credit network retail footwear and also obtained value from construction and contractor networks as they have a range of work-wear boots which accounted for approx 20% of their business). This is particularly important in nascent and growing markets.

7. Internationalization of the credit function:

forming peer-to-peer communities outside the US can be an invaluable step, especially since it is so challenging to get solid benchmark data for each country broken down by payment type (e.g., portion of the receivables that are in different instruments like Letter of Credit or Drafts). Although there may be many issues, including consistency of data within a country and unique data privacy requirements, the potential benefits of cross-border data is critical to enhancing trade and greatly outweigh the challenges you will face. Defining your different sources of credit and finance data is complex if you do not know the relative needs of each market, as well as what works and what does not work in that particular area. Defining a consistent, global credit policy is an important first step in this process. Although a global policy is ideal, be prepared for differences from country to country.

The Takeaway:

Data is a powerful tool that you can use, and it just so happens to be right at your fingertips. How do you use your data today? Are there other ways you use your data to create a competitive advantage for your company? Take the challenge. Use your data, and show the limitless value that can be found in each credit practitioner.

About Credit2B

Using patent-pending technology, Credit2B is a platform that empowers organizations and their credit teams to seamlessly exchange real-time trade credit data and share experiences on commons customers. Built as a scalable, cloud-based application, Credit2B delivers remarkably high quality and timely credit information, including fully-integrated and detailed public filings and business credit bureau data. Credit2B is simple to join, create peer and data connections and access huge amounts of information on common customers through a highly interactive and user-friendly experience.


If you are interested in learning more about Credit2b, please contact VP of Product Bonnie Gerrity (bgerrity@credit2b.com) or 646-442-3704