Manpower vs. Automation: The Credit Risk Management Debate

Credit risk management is a critical internal function for any business. Often overlooked, investing in a highly effective credit risk management system can transform, scale, and grow your business. But what does this process entail? 

Credit risk management encompasses everything from credit decisioning, approvals, monitoring, and collections. Many organizations rely on manpower instead of technology for these processes, which involves countless hours of tedious, manual labor to deliver accurate, insightful credit scoring models and risk monitoring reports to mitigate delinquencies and reduce bad debt. 

There are benefits to a manual process, such as reconfigurability, adaptability, and the fact that, for most businesses, these traditional processes are already in place and seem to be working fine. Until recently,  arguments for a manual process still held up. 

In the past few years though, automation has emerged as a clear winner in the debate. The benefits of implementing a credit risk management software solution now significantly outpace the supposed value of even a strong manual credit management process. 

Why Automation Wins

Demand drives change. Perhaps the strongest argument for automating your credit risk management process is that your competitors are already utilizing it! According to Digital Journal, the credit risk management software industry is poised to grow exponentially in the next five years. But don’t ditch your manual processes over hearsay – let’s dive into why businesses are choosing automation over traditional processes. 

  1. Market Volatility. The world is weathering unprecedented market volatility that manual processes cannot keep up with. Given record inflation levels, geopolitical tensions, supply chain obstacles, and a global pandemic, businesses need a credit approval and monitoring process that can leverage the most up-to-date data to determine risk and minimize the likelihood of increased DSO and delinquencies. 
  2. Data-Driven Forecasting. With an automated software solution, your credit decisioning process is highly contextual and data-driven, with the ability to pull data from more channels and sources than ever before. By automating the data collection and analysis process, you can leverage more comprehensive and highly accurate forecasting. Further, with a fully automated scoring and approval process, the risk of human error is essentially zero, minimizing the risk of bad debt and reducing your DSO. 
  3. Productivity. By eliminating the need for complex manual analysis, tedious monitoring, and collections, automation saves significant time and reduces costs. With a highly configurable solution like CreditPoint, you can achieve up to 10x more productivity and easily scale your business. 
  4. Proactivity. With manual processes, credit risk monitoring is inherently reactive. With automation, you can receive notifications and alerts immediately when a client’s behavior changes and before any delinquencies occur. With proactive monitoring, you can prevent collection issues from arising in the first place, saving your team time, reducing DSO, and increasing revenue to allow your business to grow and scale. 

At the end of the day, without an automated credit risk management solution, you run the risk of falling behind the competition. The productivity, proactivity, and accuracy of an automated solution has far exceeded the capabilities of manual processes, even for best-in-class teams. 

The transition from robust manual processes to a streamlined automated solution can seem daunting. If you’re considering making the switch, check out our Official Guide to Choosing a Credit Risk Management Software Solution


If you’re looking to save time, reduce risk, and ultimately increase cash flow, our automated credit risk management solution can transform your business. Schedule a consultation with CreditPoint Software to learn how you can leverage the efficiency and risk-reduction benefits of an optimized software solution.