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COPYRIGHT 2001 National Association of Credit Management
In today's competitive and ever-changing business marketplace, it is more important than ever to maintain a competitive advantage, particularly when it comes to back-end decision automation. Credit and collection managers are continually faced with having to create better decision efficiency to accurately and effectively determine the creditworthiness of their customers. Change in the decision strategy is inevitable due to changes in the portfolio, market or economic conditions. Leading companies are prospering as a result of using a knowledge-based decision strategy to make faster and better portfolio management decisions. The driving force of their success, in this e-driven "automated world," is integrating information and technology with a validated and maintained statistical-based scoring solution.
When companies are slow in making new credit authorization or credit line increase decisions on existing accounts, customers' orders are delayed, which causes quality concerns. In addition, businesses that take collection actions against customers that are likely to pay leads to customer satisfaction issues. Ultimately, customers become dissatisfied and are at risk of being lost to a competitor. Knowing quickly and accurately who the most creditworthy customers are and which ones are going to pay their invoices and which ones are not, means increasing profitability and maintaining good customer relations. After all, customer satisfaction is the key to retaining good credit performing customers and eliminating poor credit performing customers, thereby increasing your bottom line.
Why Back-End Decisions Are So Important
Many companies continue to focus attention and resources on automating front-end decisions, but ironically, back-end decisions are the foundation of their success. Most business revenue, sometimes up to 90 percent, is being produced from repeat transactions with existing customers. Existing customers are typically the engines generating the most revenue. However, they are also the cause of high DSO's, delinquencies and losses on your portfolio. The best way to understand and control risk management is through backend credit scoring, generally referred to in the industry as behavior scoring.
Implementing an automated knowledge-based decision system creates...
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