How to Mitigate Risk with Credit Risk Monitoring Software

According to Gartner Finance Research, provisions and write-offs of bad debt increased from $9,750 million in 2019 to $12,262 million in 2020 — a 25.8% increase. While we’re still bouncing back from the COVID  pandemic, today’s volatile markets mean it’s more crucial than ever before for businesses to minimize credit risk and maintain a consistent stream of revenue to stay afloat. The effects of bad debt and high DSO can be detrimental to the operations, growth, and profitability of any business.

Businesses can help mitigate the risks associated with credit decisioning by implementing best-in-class credit risk management processes and technologies. Credit risk management often focuses on minimizing risk at the initial stages of any customer engagement or interaction, which often occurs at the credit application and decisioning stage. And while weeding out bad actors from the start is a critical component of any good risk mitigation strategy, you shouldn’t be stopping there.

Post-decision, your business must continue credit risk monitoring to identify any “red flag” behaviors, anticipate and minimize late payments, and gain keen insight into operational performance.

But with a manual risk management process, effective, real-time credit risk monitoring becomes incredibly challenging and will almost certainly bog your team down with time-consuming tasks. An automated credit risk monitoring software like CreditPoint does all the heavy lifting for you with a higher degree of accuracy and efficiency. CreditPoint’s proactive credit risk monitoring will immediately alert you of any risky payment behaviors or changes in a customer’s profile and notify your team when action is needed. 

Automated credit risk monitoring software frees up company bandwidth, reduces bad debt, and increases access and visibility to all customer information. 

Increase Bandwidth

Research suggests that credit analysts spend at least 25% of their time on manual, automatable tasks. When it comes to analysts specifically tasked with risk management, that percentage is often higher. That’s at least one-quarter of your labor expenses being used on necessary but arduous processes that could, and should, be automated. 

A best-in-class automated credit risk monitoring solution accelerates the credit approval process, seamlessly integrates with your data sources, standardizes workflows, and alerts your team when action is needed.  In doing so, your employees can focus on more meaningful work and develop other skills, thereby  improving efficiency, reducing employee churn, and elevating your company’s talent pool. Freeing up 25% (or more) of company bandwidth can transform your company’s productivity and business growth, which means more revenue and less employee burnout. 

Minimize Risk 

Credit risk management software also ensures that you’re minimizing your exposure to bad debt. A best-in-class software solution will not only reduce the opportunities for human error, but allows for standardization of processes and decision-making criteria to make your team more efficient and effective. 

Many organizations turn to credit monitoring software because of their desire to reduce DSO and improve cash flow. The best way to do this is to ensure you’re mitigating the risk of bad debt from the start. Configurable scoring models can be used to standardize the approval process and make credit decisioning simple (and more accurate). 

Instead of reacting to and chasing down late payments, analysts can leverage a highly configurable solution such as CreditPoint software to gain increased transparency and the critical insight needed to mitigate credit risk. Our automated workflows alert users when actions are needed or risky behaviors are observed. With automated credit risk monitoring, you gain a high degree of visibility that ensures you’ll never miss a ‘red flag’ again. In other words, the right software can empower your team to be proactive instead of reactive. 


If you’re missing out on the benefits of automation, schedule a consultation with CreditPoint Software to learn how you can leverage the efficiency and risk-reduction benefits of an optimized credit risk monitoring solution.