In addition to this, our Global Trade Exchange Program shows that over 90% of companies who fail show an inability to pay their suppliers within six months prior to failure.

Effectively managing risk and reward can be a complex art for credit managers. How can they manage these constraints as they manage their other work responsibilities?

In this article, we’ll look at how technology can help credit managers spot customers in their risk tolerance and how automation could allow a risk/value-based decision-making method.

Which is the definition of trade credit? And how does it impact credit managers?

Put trade credit is a business-to-business (B2B) agreement in which one company (the client) can purchase goods or services from another company (the provider) without having to pay in cash at the time of purchase and instead pay on a later date agreed upon.

The benefits of credit to trade customers are accessibility to businesses that can’t get business loans, the ability to adjust to market conditions and seasonal changes, and the apparent cash flow benefits.

For the suppliers, the main advantages of providing credit for trade are the ability to gain new customers, boost sales, and retain loyal customers.

But, the increasing trade credit demands are placing more significant pressure on credit officers and creating stress in finance departments. The situation is particularly delicate because credit managers must make sure they are making the right choices. The risk for businesses on the verge of bankruptcy increases, as do current customers who must be carefully monitored.

Technology can aid in managing the risk of trade credit.

Credit managers must be competitive in today’s economic environment by balancing risk and reward.

In particular, it will be more pressure to ensure adjustments are targeted at the most risky segments and that profitable businesses are maintained. All of this must be carried out at the correct scale, with accuracy and sameness.

This is precisely where technology can be utilized to accomplish this.

Utilizing information and sophisticated analytics to determine existing customers who are within their risk tolerance, Credit managers will be able to ease the cash flow problems of their customers while preserving their financial viability and increasing loyalty to their customers.

Additionally, through automation tools to make low-value decisions and finish tedious tasks, credit officers can concentrate on higher-value or riskier decisions, relieving some of their stress.

The right tools and data can help you feel confident in decision-making and ease the burden on credit managers.