Let’s break it down....
Put simply, credit risk refers to the probability of the borrower’s failure to strictly comply with the terms of the credit contract - in other words, to make payments on any type of debt or meet contractual obligations. As a business, you could face situations where a customer is late in debt repayment, doesn’t fully pay amounts or fails to pay a debt when the principal and interest amounts are due, causing financial losses for your business and problems with cash flow.
Credit risk management, in which case, is all about the process of identifying and analysing risk factors, measuring the level of risk, and thereby selecting measures to manage credit activities to limit and eliminate those risks in the credit process.
So, what are some of the challenges you could be facing that are preventing you from having successful credit risk management?
Gaining an understanding of your overall credit risk at the individual, customer and portfolio levels is one of the first steps to nailing your credit risk management. The aim is to reduce loan losses and increase cash flow which you can do by implementing an integrating quantitative and automated credit risk solution. Basically, a tool that will do all the hard work for you.
Enter Invevo! We help you get more from your credit and risk data thanks to automated credit limit increases and reductions, real-time updates, integrated reports and more. Our unique data integration with Experian creates an automated workflow across your entire customer base, which is updated every single day so you can track credit risk in real-time.
Putting effective credit risk management processes in place is not only important to remain compliant in what has become a highly regulated environment, but if done correctly, can offer you some great business advantages!
Never miss an important credit data change that may impact your customer’s ability to pay. We help you work smarter, not harder, by replacing monthly and quarterly manual reviews with automated daily decisions.