Credit Management for Corporations

Rule-Based Evaluation and Monitoring of Creditworthiness

Modern Credit Management supports and benefits businesses by optimizing their profits and liquidity situation. In manufacturing, in commerce or in service providers such as leasing, an automated Credit Management process aids in evaluating customers’ creditworthiness and early warning of credit defaults.

With extensive electronic support of the processes, businesses have the ability to assess their customers’ creditworthiness according to their business model and risk appetite. Embedded in the solution is support for a multiplicity of workflows.

Data Collection and Import

As the first step, all data concerning customers or business partners (master data, credit limits) from internal data sources (accounting systems) and external service providers (credit bureaus, credit insurance companies, rating agencies) are entered or imported using an interface. All data are stored in a central database.

Determination of Creditworthiness

To perform a risk analysis and assessment of the customer's creditworthiness, scores and ratings are determined. They can be used to automatically approve or reject a credit appplication, and to set the maximum credit limit.

Credit and Limit Decisions

The approval process, that is when credit limits are modified, must follow rules. Automatic workflows in a modern credit management ensure the rules are adhered to.

Reporting and Administration

Under ideal conditions, all input data and output values (e.g., credit limits) are centrally stored, and time periods are defined for resubmission and for when the credit application is automatically forwarded to the credit analyst for reevaluation.

Monitoring and Early Warning System

The continuous monitoring of the customer base helps the company to find out whether credit limits have been exceeded or whether events have occurred which raise the risk.

Simulation and Impact Analyses

The ability to simulate models for rating and scoring customers is an important factor in the credit management process. The effects of changes to the model (e.g., in weighting) on creditworthiness evaluation (for example, the distribution by risk rating class or the aggregated credit limit) may be used as an early indicator.

Process Management

The credit management process is subject to constant process optimization in order to make the most efficient use of available personnel resources. Process monitoring provides useful data such as average idle periods and processing times and therefore provides information for improvement.

Risk Control

In order to receive information on a portfolio level, individual client data are aggregated. On the basis of this data, various reports can be created, providing comprehensive information on the risk distribution within the portfolio, risk concentration, and trend analyses, among other things.

Rule Technology Provides Transparency in the Credit Management Process

All steps in the credit management process mentioned above are defined by rules. The Credit Management Platform is based on the rule technology Visual Rules to make sure that the flexibility and traceability is maintained.

The rules for rating and scoring, workflow, the design of the user interface (GUI), the integration of internal and external data, reporting and process management can be defined and executed in a graphical modeling environment. Administrators can define and modify the rules independently and do not need special programming knowledge.

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