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Leveraging Artificial Intelligence Throughout the Credit Management Process

Artificial Intelligence (AI). It’s a hot topic, and to some, it’s can be a scary topic. The movies have not always portrayed AI in a very positive light, and in the workplace, many people are apprehensive that it might put them out of a job. In reality, AI has great potential to make their jobs easier; and in fact, they most likely are already using it in some capacity. That’s certainly true within the credit management process, and it soon will be fundamental throughout the credit lifecycle.

AI in credit risk analysis

Artificial Intelligence or AI is a machine’s ability to mimic how the human brain functions and to continually learn and adapt to improve performance. AI can process more data than any human or team of humans. It’s a valuable tool for helping to simplify, speed up, and solve various tasks across a wide spectrum of industries, including financial services.

Credit managers and finance professionals are consistently under pressure to reduce credit decision times and provide better predictive analysis. There are many data points involved in determining credit risk, which consumes a tremendous amount of time and effort to curate. With AI tools, credit managers and finance professionals can collect and assess data sources within seconds and analyze them to determine the level of risk. AI also enables strategic partnerships between sales and credit teams to boost sales and improve credit risk analysis.

AI in credit risk monitoring and accounts receivables

AI is gaining traction as a tool that helps streamline inefficient accounting processes such as payment processing and monitoring customer accounts for issues. AI can provide a big picture view of customer accounts, making it easier to gain an accurate view of each customer’s situation. For example, AI can assist with combining the insights collected from customer accounts and their online and social activities, providing critical insight to account managers.

Account managers can use AI tools to set triggers for account review and detect problems that might signal a potential default. AI can streamline customer interactions by learning the best times and methods of contact for each customer. It also can speed up invoicing and payment processing, improving cash flow and allowing credit personnel to focus on more strategic tasks.

AI in collections

AI’s ability to detect a problem with a customer account before it turns into a delinquency is much more cost-efficient than waiting for a customer to default and then sending them to collections. With AI, account managers can act at the first sign of trouble through personalization and outreach, increasing the chances that collection efforts will succeed.

Traditionally, credit managers focused on large accounts and neglected smaller ones. Unfortunately, this meant that those smaller accounts were at greater risk for delinquency with chances of recovery diminishing over time. AI monitors all accounts and invoices with equal focus, ensuring no account falls through the cracks. In fact, AI looks at internal and external data sources, such as payment history and credit bureaus, and can predict the likelihood of a customer becoming delinquent 60 days in the future. It can then prioritize accounts to reduce delinquencies.

AI is still new, and credit and finance managers may be reluctant to trust their credit decisions to a machine. But over time, the efficiencies, accuracy, and cost savings that AI brings to the credit industry will drive its acceptance. By leveraging AI technologies, credit personnel can focus on tasks that drive cash flow and improve the bottom line.

Need help managing your commercial credit risk? MSCCM financial experts can assist you. Contact us today.