Managing Customer Credit Risk within Sage Intacct

Credit risk management is crucial to ensure timely and accurate collection of receivables. Credit risk management also helps you minimize write-offs and maintain healthy customer relationships.

What is credit risk?

Simply put, credit risk is the risk of loss due to a customer not paying their outstanding balance. More specifically, it refers to the risk to suppliers when customers fail to honor an invoice, hindering their cash flow.

Effective credit risk management helps safeguard critical business interests and mitigate cash flow uncertainties.

Many companies still use manual processes to facilitate customer credit risk management. Analysts mostly rely on agencies and secondary sources to do credit risk analysis.

Best practices for credit risk management

Sage Intacct is one of the leading ERPs in the finance sphere. It complies with major industry standards such as the AICPA and can be configured to manage all your corporate financial risks.

Here are some ways Sage Intacct users can recognize business threats and mitigate credit risk with some out-of-the-box strategies.

1. Credit risk assessment: Best in class organizations leverage automated credit scoring to support risk assessment and forecasting.

Integration with AR automation solutions can help Sage Intacct users auto-assign risk score, risk category, and credit limits using predefined algorithms.

2. Credit limit allotment: Leverage external credit risk information reports and recommend ideal credit limits for different customers. Identifying optimal credit limits helps you maintain strong customer relationships while minimizing the probability of write-offs.

3. Credit utilization tracking: Sage Intacct enabled with add-on tools can help  AR teams to track the credit utilization of their customers. With this capability, cross-functional teams can access credit data in real-time from anywhere and are not restricted by any data silos.

It also lets your AR team mitigate risks and stay up-to-date on news and bankruptcy information concerning your customer portfolio.

4. Real-time risk tracking: Centralized dashboard can help you track exposure and credit limit trends. You can also determine your risk levels across a different customer or geographic categories.

Why do Sage Intacct users need to think “out-of-the-box”?

The following are some areas where Sage Intacct users need to look at out-of-the-box strategies to manage their credit risk.

• Sage Intacct does not automate end-to-end credit risk management. Your AR team may have to manually score customers, analyze credit utilization data, and assign credit limits by gleaning secondary information from credit risk agencies such as Dun & Bradstreet, Hoovers, and others. Predictive features to determine the probability of default are also limited.
• Sage Intacct may not always be up-to-date with the latest credit risk data. The most recent credit risk-related events may not appear in the credit reports downloaded from Sage Intacct ERP. This can hinder your team’s ability to foresee potential credit risks. This may also lead to increased bad debts and inefficient strategies to prevent delinquencies and revenue leakage.

How do we help?

To be fully successful in minimizing credit risk and ensuring timely cash flows, you need to have much more than the basic AR management features.

Our RadiusOne Credit App enables AR teams to automate credit scoring and credit risk evaluation to standardize the credit approval process. We help you make faster and more accurate credit decisions.

RadiusOne Credit Risk App seamlessly integrates with Sage Intacct and helps your finance team fast-track credit management processes and focus on other strategic functions.