The power of automated credit decision making, minus the headaches.(selected topic)

Visit the B2B credit departments of many thriving companies and you will find a picture of efficiency. Trouble is, the picture could be decades old.

On the consumer side, credit managers have embraced score-based, computer-driven credit decision making. Conversely, most B2B credit extended to suppliers, contractors and other companies comes by way of paper, staples and paper clips. Barely more than a third of B2B receivables managers were using automated systems to drive credit decisions, according to a 2003 survey by the Credit Research Foundation (CRF).

As paper applications get processed, bank and trade references are checked and credit reports pulled by hand, the process can take a week or more as documents march their way up and down the organization for approval. The motto at many B2B credit departments seems to be, "It may be stow, but it's what I feel comfortable with," or perhaps, "When I can get out from under art this paper, maybe I'll start to think about a better way."

Why the reluctance to embrace a better, faster way to make credit decisions? Credit managers have their reasons.

Twenty-one percent in the survey intuitively believed an automated credit management system would help, but didn't know how to justify the return on investment. More than a third cited concerns about the cost of automating their systems--typically an expense of between $5,000 and $25,000 if done in-house. And nearly 29 percent feared a lack of technical support.

This fits with what can happen with any new technology. The gap between glittering promise and the end user's reality can be huge. And in the rearm of automated credit decision making, disappointments were common in the past. Expected dramatic increases in efficiencies sometimes failed to emerge, or did so only after a painful transition. Some early-adopting credit managers bought into the vision of automated credit systems only to find themselves dealing with unanticipated headaches: clunky, balky software; training challenges; and weak technical support to efficiently work through glitches.

We believe automated decision making is ready for prime time and can take all of the headaches out of the process. Additionally, with implementation easier than ever, the benefits of automated decision-making can reach smaller companies with fewer accounts.