All too often as credit risk professionals, we don’t take the time to evaluate our credit policies because “that’s how it has always been done around here”. Unfortunately, it is this sheer mentality that increases days sales outstanding, raises uncollectable debt and prohibits us from identifying  good growth opportunities.  Reviewing your policies early and often enables credit risk professionals to  create more sophisticated rules around how to extend credit.

One way to establish a clear cut set of rules around your credit policy is to automate your credit decision making process. I know when some credit professionals hear the word “automation”, they run the other way. Typically, two concerns come to mind: 1) A computer is going to take my job away OR 2.) Credit automation is too expensive!  Well – Guess what?  Neither of these is necessarily true.

Automating your credit policy simply allows credit risk professionals to focus on the important things that matter when making credit decisions. Ultimately – a good credit decisioning system allows good applicants to get automatically approved and the bad applicants to get automatically declined without getting you involved.  Your time is most efficiently spent on the accounts that need human intervention – applications that fall on the cusp of a decision. This analysis even a computer can’t do! 

Most credit automation tools have come a long way. The market now offers various ‘out of the box’ solutions depending on the level of automation desired by your company. Once a costly tool – now it’s a cost savings tool!

How do you know if your business is ready to automate your credit decision making process? Take this self-diagnosis test. If you answer “YES” to any of these questions – it’s time to pull the trigger on automated credit decisioning!

• Is your credit operation decentralized with multiple regional analysts making decisions independent of one another?
•  Are you having issues establishing an audit trail on credit line extensions?
• Are you finding inconsistencies on how analysts assign out credit limits?
• Do you think your credit analysts are spending too much time manually reviewing credit applications?

 If you answered ‘YES’ to any one of these questions – automating your credit policy just might be the solution you’ve been looking for. So what are you waiting for? Pull the trigger!

Last time we talked about how credit policies are like a plant grown from a seed. They need regular review and attention just like the plants in your garden to really bloom.

 A credit policy is simply a consistent guideline to follow when decisioning accounts, reviewing accounts, collecting and setting terms.

 Opening accounts is just the first step. Here are a couple of key items to consider in reviewing  accounts:

 How many of your approved accounts are paying you late?

• What is their average days beyond terms?
• How much credit have they been extended?
• What attributes of these late paying accounts can predict future payment behavior?

 I recently worked with a client to create an automated credit policy that consistently reviews accounts based on predictive credit attributes, public records and exception rules using the batch account review decisioning tools within BusinessIQ. The credit team now feels like they are proactively managing their accounts instead of just reacting to them.

 A solid credit policy not only focuses on opening accounts, but also on regular account review which can help you reduce your overall risk.

Fast, accurate, and efficient is the way most people want decisions in today’s hyper-competitive world.  You can also add: ‘customized to my company’s specific risk policies’ and ‘flexible to change as circumstances change’—naturally, wanting this right away, no waiting.  Does this sound like the type of decision system you would love to have?  Not surprisingly, that is what we have heard from clients.

DecisionIQ is a powerful tool for implementing all the above.  How does it work?  First, you start with Intelliscore Plus, a business credit score.  You can setup multiple score ranges with approve, review, and decline decisions, or customize the decision to fit your specific business model (deposit required, etc.)  Next, you can establish kick-out rules.  A good example would be if a company has been in business less than a year, it always gets reviewed.  The key point here is that these rules are flexible, with multiple data elements and settings to select from.

The real power comes in adding rule sets.  Say you are approving accounts that are in the top 25% of scores, and you will provide them with a credit line of $10,000. You can then add multiple rules:  is the company in health services?  If so, now provide a credit line of $25,000.  Or, is the company under 10 employees?  Then provide a credit line of $5,000.  It’s all up to you—and you can change these rules on the fly, creating different rule sets for different divisions or product lines—all with a few clicks.

These decisions are produced automatically, a perfect solution for decentralized operations, such as for multiple branch offices.  You also control what each location sees, from just the decision, to the decision with a full business report and score.

Fast, accurate, efficient AND flexible?  Yes, we can help you with that—DecisionIQ Premier.  To learn more about Experian Business Information Services, visit http://www.experian.com/b2b.

Today, Experian debuted DecisionIQ Premier at FinovateSpring in San Francisco.  In front of an audience of more than 750 financial services industry leaders we discussed the features and benefits of our new service.  Our newest offering is available on BusinessIQ.  BusinessIQ was designed and built to provide an easy to use single platform that delivers all of the data, analytics, and tools that a commercial credit professional needs.  Whether users need credit reports, scores, alerts, portfolio management tools, collections management tools, or decisioning support, BusinessIQ covers all of their needs.

Allen Anderson, president of Experian’s Business Information Services, presented DecisionIQ Premier.  He highlighted how this new service extends the functionality of BusinessIQ, to include configurable credit application building tools and commercial credit decisioning capabilities.  DecisionIQ is a simple to use tool that delivers consistency in the credit decisioning process, and helps our clients manage their commercial credit risk, and grow their business more profitably.

We had a great experience at Finovate. The event proved to be a great opportunity to showcase our latest innovation to an audience of industry luminaries and technology leaders.  We received excellent feedback from the attendees and our fellow presenters.  For more information on BusinessIQ or DecisionIQ Premier, please go to www.experian.com/b2b.

Today, I am at the FinovateSpring conference at the Concourse Exhibition Center in San Francisco.  Finovate is the first “all demo focused” conference that highlights cutting edge technologies and innovative advancements in the consumer and commercial financial services space.  After a rigorous application and selection process, Experian’s Business Information Services was selected as one of 64 companies to present our latest innovation.  Tomorrow morning we will debut our new DecisionIQ Premier offering on stage.

Along with the presenting companies at the conference, there are a number of analysts, journalists, and financial services companies that attend to stay on top of the latest advancements in this area.  The Finovate team tells me that this year’s spring conference sets a record for attendance with more than 750 people registered.

The companies that are scheduled to present over the two-day event span the gamut, from new upstart firms, to established service providers like Experian.  Throughout the day, I sat through a number of the presentations and saw some very interesting new technologies.  We are looking forward to our presentation on stage. Check in tomorrow for more details about DecisionIQ Premier.