Credit Analysis Technology Solutions Need to Save You Time, Not Make More Work

From trade data to public financial records, credit managers use several types of financial records to gather insight into the creditworthiness of a company. While this data is also leveraged to pinpoint ongoing dollar risk within a portfolio, credit departments lack the time and manpower to turn this data into a resource for monitoring companies on an ongoing basis.

With the right technology and analytics, however, companies can use the data already in-house to maintain a healthy portfolio and mitigate risk before it causes a domino effect of credit concerns. The trick is knowing what analytics are essential for accuracy when it comes to staying ahead of financial distress.

See how the FRISK® score uses the data from the last five quarters to warn of NII Holdings’ high risk for bankruptcy

Technology needs to save you time, not make more work

When working with a portfolio of say, 200 customers, it’s nearly impossible to commit the time or the manpower necessary to constantly assess your customers’ financial health in today’s fast moving economy. This means there’s potential for unexpected financial failure or even a bankruptcy surprise.

The best technology solutions will provide:

  • Continuous monitoring for real-time results
  • Powerful analytics that pinpoint potential risk
  • Historical data that can highlight trends in a company’s financial behavior
  • A complete, up-to-date view of the portfolio in an easily digestible format

 

Red flags indicating financial risk reveal themselves many months before a company actually files for bankruptcy. But when managing a few hundred accounts, things will invariably slip through the cracks. This is where technology can - and should - improve efficiency. Technology that requires extensive reworking of your IT infrastructure, or using data providers that aggregate data but still require you to perform the analyses defeats the purpose of saving time.

Data Providers Should Offer Industry and Company-Specific Data

Working in volatile industries like retail, solar, or telecommunications means a company’s portfolio may consistently be exposed to risk. Many other unstable industries have conditions that can change on a dime, meaning financial stress may hit your portfolio before the research is complete. While some industries experience distress in clusters, there are always winners in the mix that can be examined as alternative suppliers or gold standard models for those in your own portfolio.

Some of these credit analysis technologies can provide an industry view along with detailed, aggregated data on the specific companies within it. The key is to be able to evaluate individual companies in an industry to see where your customers stand among their peers. Traditionally, this would be a time-prohibitive task with a high margin for error.  The ability for credit managers to investigate the difference between strong and weak companies in a given industry without having to perform a deep analysis on a large set of competitors offer a commodity you can’t buy: time.

Learn how the FRISK® Stress Index pinpointed potential risk for companies that considered refinancing

About CreditRiskMonitor

CreditRiskMonitor is a financial news and analysis service designed to help professionals stay ahead of public company risk quickly, accurately and cost-effectively. More than 35% of the Fortune 1000, plus thousands more worldwide, rely on our commercial credit reporting and predictive risk analytics for assessing the financial stability of over 58,000 global public companies.

At the core of CreditRiskMonitor’s service is its 96% accurate FRISK® score, which is formulated to predict public company bankruptcy risk. One of four key components calculated in the FRISK® score is crowdsourced subscriber activity. This unique system tracks subscribers' patterns of research activity, capturing and aggregating the real-time concerns of what are essentially the key gatekeepers of corporate credit. Other features of CreditRiskMonitor’s service include timely news alerts, the Altman Z” score, agency ratings, financial ratios and trends. CreditRiskMonitor’s network of trade contributors provides more than $135 billion in trade data on their counterparties every month, giving them visibility into their biggest dollar risks.