The key to effective credit risk management: scope, scalability and data quality

Henrica Westhoeve
September 7 2023 - Reading time 5 minutes

In a previous article you could read about how to apply credit risk screening in your organisation. In it, we described which credit risk solution would be a good fit for you. In this next article, we will elaborate on this. When looking for a credit risk tool, you should take into account the scope of your company (national versus international), the scalability of the solution, but also the quality of the data you use.

National, but doing business internationally?

The moment you start looking for a suitable tool to use in the finance department, you have to ask yourself where you operate as a company. If you operate nationally and you are looking for another national company, an extract from the KVK or the KBO will get you very far. But did you know that even as a nationally operating company, you often have to deal with foreign companies? Think about suppliers from other (neighbouring) countries or customers from other countries. All in all, you are dealing with international partners more often than you think.

Unfortunately, each country uses a different form of a company database, and this makes it difficult to find information from a customer or supplier who is abroad. A global company database is of great help here. You can find which credit solution is best to use within this database here..

See: Your complete cash to credit platform

Scalability

Scalability is very important in a credit risk solution for the long term. You want to choose a tool that can grow with your business and adapt to changing needs. Imagine your organisation is growing and expanding internationally. In that case, it is essential that your credit risk solution can grow with you without having to replace your entire system.

A scalable solution is flexible and can easily adapt to the scale of your operations. This means that you are not stuck with a limited set of features or capabilities that may hinder you in the future. It is wise to opt for a solution that is modular so that you can add new features when needed. Another aspect of scalability is the ability to integrate with other systems you already use in your organisation. A seamless integration ensures smooth data exchange and minimises duplication of effort. This allows you to work more efficiently and gain more accurate insight into your credit risk situation.

See: Data Blocks: Modular data for your company

Data quality is crucial

In addition to the scope and scalability of the credit risk solution, the quality of the data used is of paramount importance. Your decisions will only be as good as the information you have. It is essential to ensure accurate and up-to-date data to adequately assess risks.

Make sure the tool you choose has access to reliable and comprehensive sources of business information. This can range from financial data and payment history to business relationships and legal information. Using outdated or incomplete data can lead to wrong decisions and costly losses.

In addition, it is important that the credit risk solution has advanced analytical tools to effectively interpret the collected data. This allows you to accurately assess risks and anticipate potential problems before they occur.

In short, when choosing a credit risk solution for your organisation, it is crucial to consider the scope of your business, the scalability of the solution and the quality of the data used. By considering these factors, you can make a good choice that will help you deal with credit risk effectively and proactively in both national and international contexts.

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