# Data, automation and the personal touch – the future of credit management
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-08-27
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Future-Proofing Credit Management in Uncertain Times
Meta Description: Discover how finance teams can transform credit management through data-driven strategies, automation, and personal touch for long-term growth.
URL: https://financedigest.com/data-automation-and-the-personal-touch-the-future-of-credit-managementhtml

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_By **Marieke Saeij,** CEO, Onguard_

The Covid-19 pandemic is forcing finance teams into a critical new balancing act. As businesses adapt to the new economic conditions, finance departments find themselves having to balance long-term growth with the need to restart the flow of payments from current customers.

Growth depends very substantially on meeting the requirements of customers who [need finance](https://www.financedigest.com/global-crises-that-need-the-finance-industry.html "Global Crises That Need The Finance Industry"). Payments, on the other hand, rely on customers gaining release from [payment freezes](https://www.financedigest.com/ukraine-seeks-debt-payment-freeze-as-war-ravages-economy.html "Ukraine seeks debt payment freeze as war ravages economy"), which often requires on-going help.

The first half of this unique year saw [digital transformation](https://www.financedigest.com/financial-digital-transformation-an-opportunity-not-a-threat.html "Financial digital transformation: An opportunity, not a threat") accelerate under the economic pressures of the pandemic as organisations sought rapid efficiency gains and strove to reinforce business continuity. With so many potential unknowns still affecting customers as we go well into the second half of 2020, finance teams must now focus on one critical area – future-proofing their credit management.

This is a critical area for any organisation. Finance and specifically, credit management, concerns the [entire business](https://www.financedigest.com/asset-management-it-solution-market-asset-management-grow-crucial-for-various-organizations-to-evaluate-entire-business.html "Asset Management IT Solution Market – Asset Management Grow Crucial for Various Organizations to Evaluate Entire Business") and in tough times, is crucial to survival. A three-pronged approach is required to ensure [growth by transforming credit management so it becomes fit for the future](https://www.financedigest.com/plug-in-hybrid-electric-vehicles-phev-market-trends-growth-future-demand-analysis-and-forecast-by-2026.html "Plug-in Hybrid Electric Vehicles (PHEV) Market Trends, Growth, Future Demand, Analysis and Forecast by 2026"). It consists firstly of the implementation of a data-driven strategy, secondly on increasing automation and deployment of [artificial intelligence](https://www.financedigest.com/types-of-artificial-intelligence.html "artificial intelligence") (AI), and thirdly, on retaining the personal touch.

**A business should start with its own data**

The advantages of being a data-driven organisation are increasingly appreciated. It is why more than three-quarters (68 per cent) of finance professionals in the Onguard 2020 FinTech Barometer, said their organisation is already undergoing [digital transformation](https://www.financedigest.com/critical-learnings-in-digital-transformation.html "Critical learnings in digital transformation ").

Credit management founded on data insights can help to reduce the days sales outstanding (DSO) and allow credit [managers to create a better understanding of risk](https://www.financedigest.com/early-detection-of-mismatched-trades-is-key-to-managing-risk-and-maximizing-profits-on-the-pl-desk.html "EARLY DETECTION OF MISMATCHED TRADES IS KEY TO MANAGING RISK AND MAXIMIZING PROFITS ON THE P&L DESK") profiles. Identifying [payment patterns from the data](https://www.financedigest.com/understanding-the-realities-of-payment-data-monetisation.html "Understanding the realities of payment data monetisation") produces better risk analyses and the ability to anticipate trends. The [finance team](https://www.financedigest.com/protecting-the-finance-team-from-burnout-to-drive-employee-retention.html "Protecting the finance team from burnout to drive employee retention") is more rapidly alerted to the first signs that a customer will not pay, for example. Staff can then step in to resolve the situation, approaching the customer to discuss invoice payment. [Data analysis](https://www.financedigest.com/comparative-analysis-of-the-best-data-room-providers.html "Comparative Analysis of the Best Data Room Providers") will also predict a prospective customer’s expected growth, chance of bankruptcy or payment behaviour. This is not a capability many organisations currently have without laborious use of manual methods.

Once they have these insights, finance departments can better advise management at the strategic level, elevating their role within organisations. But finance professionals’ insights may also help other colleagues. One such example is [sharing risk information with account](https://www.financedigest.com/the-sharing-economy-whats-in-it-for-accountants.html "THE SHARING ECONOMY: WHAT’S IN IT FOR ACCOUNTANTS?") managers, which will allow them to better calculate whether or not to approach a customer for upselling or new business.

Yet despite all the discussion of [digital transformation](https://www.financedigest.com/the-future-of-fintech-forging-ahead-with-digital-transformation.html "The future of fintech: Forging ahead with digital transformation"), most organisations still only use a portion of their available business data. This is as true in credit management as any other area. According to the Barometer, only seven per cent of executives think their own organisation is already data-driven. It means the focus in credit management, as in other departments, must be on exploiting an organisation’s existing data riches because this is the most efficient and cost-effective route to becoming data-driven.

For maximum return on investment, businesses must use data from their own consumer base, such as customers’ payment behaviour. External data can be expensive, as pointed out last month (July) by [McKinsey](https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/reducing-data-costs-without-jeopardizing-growth), but its use may strengthen an organisation’s own data resources, bringing a wider understanding of the market that makes for better decision-making. As it evolves, an organisation can combine internal and external sources to best suits its needs.

![Marieke Saeij](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/marieke-saeij-ceo-450x450-1736838861048-compressed.jpeg)

Marieke Saeij

The gains from this approach are tangible and come as enhanced sales, improved products, better finances and more targeted marketing, supplying a better [service that boosts satisfaction levels and leads to improved](https://www.financedigest.com/how-can-financial-firms-improve-customer-service-after-the-pandemic.html "How Can Financial Firms Improve Customer Service after the Pandemic?") relationships. Using in-house data will not hamper development. An organisation can combine both internal and external sources as it evolves.

**Automation and AI**

No discussion of future-proofing can take place without consideration of robotic [process automation](https://www.financedigest.com/what-businesses-can-achieve-with-microsofts-full-suite-of-process-automation-tools.html "What businesses can achieve with Microsoft’s full suite of process automation tools") (RPA) and artificial intelligence (AI).

RPA [automates the hugely repetitive manual tasks in credit management](https://www.financedigest.com/impact-com-named-a-market-leader-in-research-in-actions-partner-management-automation-report-and-in-g2-winter-reports.html "impact.com Named a Market Leader in Research in Action’s Partner Management Automation Report and in G2 Winter Reports") that involve collection and collation of masses of data. Not only is this very time-consuming, it diverts skilled employees from more valuable work.

AI, however, is the group of technologies with more far-reaching potential, making smart use of all available data. It links everything from CRM and ERP system data, to all the cogs in the order-to-cash process. This includes linking [accounts receivables management with data about customer](https://www.financedigest.com/covid-19-has-made-your-customer-accounts-more-valuable.html "Covid-19 has made your customer accounts more valuable") acceptance and e-invoicing. AI integrates these processes, transforming efficiency and [delivering new insights](https://www.financedigest.com/research-delivers-insight-into-the-global-polymer-surfactants-market-during-the-period-2021-2029.html "Research Delivers Insight Into The Global Polymer Surfactants Market During The Period 2021-2029") through its analytical power. For finance departments it will also link with recognised parties that provide credit information, as well as payment service-providers and an automatic payment processing solution.

This, however, is only the starting point. AI’s predictive capabilities help minimise non-payment risk, support the forecasting of cashflow and advise on follow-up actions. This includes, for example, whether individual customers will respond better to phone calls, or when there is no alternative to commencement of collection proceedings.

Using individual insights based on consumer history, AI can even help identify the best time to contact specific customers, preventing unnecessary calls if the customer is known to be unavailable. This will this dramatically improve [operational efficiency and if customers are approached in the right way](https://www.financedigest.com/finance-operations-efficiency-7-ways-to-slick-up-your-department.html "Finance operations efficiency – 7 ways to slick up your department"), at the right time, will enhance relationships and bolster retention.

**The personal touch**

Although the [future of credit management is going to depend very heavily on effective implementation of the right technology](https://www.financedigest.com/nutragenomics-market-overview-forthcoming-technologies-future-trends-latest-insights-by-share-outlook-till-2022-2029.html "Nutragenomics Market Overview, Forthcoming Technologies, Future Trends, Latest Insights By Share, Outlook Till 2022-2029"), the importance of personal relationships cannot be underestimated. A company that automates all contact with its customers will rapidly find credit management becomes unprofitable, because personal relationships remain so important.

As much as a [finance department needs to embed a digital](https://www.financedigest.com/the-digital-finance-revolution-empowered-consumers-turn-digital-to-protect-financial-security.html "The digital finance revolution: empowered consumers turn digital to protect financial security") culture, it cannot just rely on the technology to take care of everything. All [finance teams must adopt a hybrid approach that meshes the best data-driven tools with a heavy degree of personal](https://www.financedigest.com/cracking-the-personal-finance-code.html "Cracking the Personal Finance Code") involvement. This is not a matter of sentimentality – it is the most reliable means of ensuring optimal performance, [profitability and customer](https://www.financedigest.com/britains-metro-bank-returned-to-profit-in-september-sees-no-customer-stress.html "Britain’s Metro Bank returned to profit in September, sees no customer stress") satisfaction.

No two customers are the same and each needs to be taken on their own terms. Although data provides insight into overall payment patterns, it does not reflect every aspect of the relationship with the customer. A credit manager, for example, might [know that it only takes a single call to trigger payment](https://www.financedigest.com/does-softpos-signal-the-end-of-payment-hardware-as-we-know-it.html "Does SoftPOS signal the end of payment hardware as we know it?") from a certain customer. AI has immense capabilities but still lacks the emotional intelligence to pick up on the nuances and subtleties of character that make a difference. This matters, because [customers will soon switch providers](https://www.financedigest.com/verasity-joins-the-brightcove-marketplace-to-provide-customers-with-proprietary-ad-tech-technology.html "Verasity Joins the Brightcove Marketplace to Provide Customers With Proprietary Ad-Tech Technology") when service-levels drop or if they start to feel they are just being treated as a number.

One of the ironies, however, is that if an organisation has the right credit [management solution](https://www.financedigest.com/quality-and-compliance-management-solution-market-to-rise-at-a-high-cagr-of-9-4.html "Quality and Compliance Management Solution Market to rise at a high CAGR of 9.4%"), it will understand more about the customer and have a firmer basis for effective person-to-person interaction. If you know more about a customer, saying the right things to obtain the right outcome becomes easier.

**Conclusion**

The [future of credit management will be driven](https://www.financedigest.com/air-separation-plant-market-to-register-5-cagr-driven-by-surging-demand-for-nitrogen-gas-within-food-beverage-sector-future-market-insights.html "Air Separation Plant Market to Register 5% CAGR Driven by Surging Demand for Nitrogen Gas within Food & Beverage Sector: Future Market Insights") by data. The evidence is overwhelming. Data insights generate far better decision-making and outcomes, giving any organisation a substantial edge on its competitors. But they also embed another vital attribute in uncertain times – agility.

If a further wave of virus-outbreaks or trade disruptions pummels the [world economy](https://www.financedigest.com/gas-price-surge-just-one-more-headwind-for-world-economy.html "Gas price surge, just one more headwind for world economy"), organisations need to be as agile as possible, ready to meet the challenges with credit management that is already future-proof. That requires becoming data-driven and the adoption of fully-tested automation and AI.

Yet reliance on technology alone will not guarantee success. Organisations [must continue to recognise the importance of human interaction with customers](https://www.financedigest.com/lost-in-translation-why-banks-must-learn-the-language-of-their-customers.html "Lost in Translation: Why Banks Must Learn the Language of their Customers"). In fraught [times they may want to see a face or hear a reassuring](https://www.financedigest.com/credit-suisse-executives-reassure-investors-after-cds-spike-financial-times-reports.html "Credit Suisse executives reassure investors after CDS spike, Financial Times reports") voice, confirming what they see on a screen.

Alongside the implementation of solutions that deliver results quickly and cost-effectively, organisations need to embrace this hybrid approach that blends the best of conventional methods whilst preparing them for the [data-driven future](https://www.financedigest.com/the-data-driven-future-of-the-insurance-industry.html "The data-driven future of the insurance industry").


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