Integrating Credit Decisions with the Back Office

Experian is a CMA credit reporting partner.
Back office credit decisioning and why it matters

By Carl Stronach, Experian

When you’re launching a new product, business line, or starting up a business, you’ve got to move fast and break things.  This means taking a minimum viable product (MVP) approach, where you’ve got to sacrifice scalability by implementing manual processes to support the early stage business.  Commonly, a manual process will be in place for credit applications and approvals – pulling the credit report, reviewing the data against a scorecard or policy and then making the decision. Since this likely takes a day — or often longer — the process decreases your customer’s experience, and can hurt your ability to scale and grow revenue the longer you wait to automate.

To grow the business and take it to the next level, you need to migrate away from the paper-pushing approach. The next step is to move toward an automated solution that integrates credit decisions with the back office, such as an ERP, CRM, or other custom system, employing APIs.

Using an Application Programming Interface (API) to Connect to Your Decision Engine

An API, or Application Programming Interface, is many things. It’s a set of instructions and technical documentation for developers. It’s a collection of services which allow you to interact with a product or service. And it’s a way for businesses to open-up and allow for new kinds of innovation – allowing for new business models and application development that wouldn’t be possible without APIs.

In the last decade, APIs have become system agnostic, meaning they plug-and-play into nearly any system because they are standardized and popular amongst the development community.

Because of this popularity, APIs make it easier for the business to get buy-in from the IT department, which is essential to automating the credit decisioning process. Without an API, the IT department must devote significant resources to the project because more infrastructure to host large database will be required. APIs allow you to pull data in real-time only when you need it, reducing system complexity and decreasing application development costs.  Reduced complexity also means less risk because you are more assured that your IT department will be successful with the integration. Often, when IT departments are presented with information about the API, their response is “No problem, this is standard. We have integrated with a very similar API before. We can do this.”

How does your decision engine interact with APIs? You can use APIs to get the raw data elements your credit policy or model needs to render a decision, no matter if the data is internal to your business or provided by third parties.

Taking Decisions to the Next Level with Machine Learning

According to a recent Harvard Business Review project, the key to successfully utilizing machine learning isn’t to get caught up in new and exotic algorithms, but to make the deployment of machine learning easier.  There are many use cases where machine learning can be employed, but use cases where data-driven decisions are being made, as in the credit approval process, are archetypical.

During the early stages of the machine learning process, you train the model by feeding it data from past applications. Then, as you use the engine for real-time processing, the engine learns from past decisions. If the engine was originally approving applications with a borderline credit score, but found that these applications often ended up being poor risks, the model would then begin turning down these applications.

The key ingredient in making machine learning start to work for your credit department is to have domain experts, credit managers, help the IT department focus on the key variables that can help the machine learning model to predict key outcomes – credit losses, bankruptcies, and business failures, and to put the models through many rounds of testing and validation before putting them into real-life practice.

Now is the time to move your manual processes online using an API and machine learning. According to Mary Meeker’s Annual Internet Trend Report, 60 percent of customers pay digitally compared to 40 percent in the store.  And it’s likely that the gap will continue to grow. The longer you wait, the further ahead your competitors will be in digitizing the customer experience — and the harder it will be to regain your footing and catch up.

CMA offers solutions, such as Experian and other bureau credit reports, Industry Credit Groups and more to help companies determine how much business credit to extend. For more information on how we can help your company, contact Credit Management Association at 818-972-5300 or visit www.CreditManagementAssociation.org.

This article originally appeared here and has been reprinted with permission.

President’s Blog: CMA Membership Budget Guide for 2017, by Mike Mitchell, CAE

 

CMA President and CEO Mike Mitchell
CMA President and CEO Mike Mitchell

All too often, our members tell us that they want to take advantage of all of CMA’s benefits but they say they do not have the budget to do so. For companies on a calendar fiscal year, here’s your opportunity to begin planning for those budget worthy benefits for 2017. Even if your next fiscal year extends well into 2017, it’s never too early to start your wish list.

If your company is one of the 600+ members that participate in one of CMA’s 51 Industry Credit Groups, then you know how valuable it can be to have unlimited access to anscers Credit Reports, RFIs, Credit Alerts, and the knowledge and experience of other credit professionals in your industry. In the past year, CMA group members have submitted more than 45,000 RFIs, warned other group members with more than 6,800 Credit Alerts (which included NSF and bankruptcy information), and shared countless stories about best practices in credit. Many credit group members have reported that they still find their credit groups and the shared trade payment experience the fastest and most economical way to conduct timely due diligence on prospective customers and effectively manage existing customer accounts. The unique combination of industry trade data, insider knowledge about common customers and industry best practices often recoups your dues many times over in helping group members minimize risk and grow revenue.

Before you budget, consider whether you are getting the best value possible for your credit information needs. Let CMA’s experts help you analyze your current credit reporting product mix – we might be able to save you money (and help you get better results) by suggesting a different report or mix of products that better meet your company’s risk assessment requirements while staying within budget. In addition to credit bureau contracts, CMA has several transactional credit report products priced to deliver maximum value at minimum cost. We have also seen usage for the NACM NTCR increase significantly over last year. Only CMA members have access to the millions of tradelines in the NACM National Trade Database (many of which are only available in this report), and at only $14.95 each, the NTCR reports are a great value for an initial credit check. CMA’s anscersX multi-bureau report combines proprietary scores and data elements from all three major credit bureaus (Dun & Bradstreet, Experian, Equifax) to give you a comprehensive look at the payment history of your customer or prospect ($69 per report). Be sure to budget for some anscersX reports to supplement your existing credit reports.

If you are a construction supplier, consider how using CMA’s Lien Filing Service can save you time and money. With more than 30 years of experience providing services ranging from preliminary notices to lien warning notices, mechanics liens, bond claims and stop notices, CMA has hundreds of clients across the United States who value the personalized, unlimited support from CMA’s caring and knowledgeable staff. You might be interested in CMA’s new Construction Credit Report, providing title data, public record data, active trade lines, credit analysis and scores, collection agency activity and links to state contractor information. The report, which is the only all-inclusive report of its type, runs $29.95 per report.

CMA’s collections partner, AG Adjustments, offers third-party collection services at competitive rates on a contingency basis.

If you’re looking for professional development help for your staff, CMA is again offering NACM Certification Courses for the CBA (Credit Business Associate) and CBF (Credit Business Fellow) designations starting in January. These will only be offered once next year, unless there is sufficient participation for additional classes. If you plan to get certified in 2017 or early 2018, you’ll need to register for the Certification Courses now and budget accordingly ($899-$995 per course). Information for all professional development events can be found on CMA’s website and on anscers.com under the Education tab.

CMA will continue to offer its standard webinar program, which includes several series on topics such as collections, advanced lien law and credit reporting. Our webinars typically cost $49 for CMA members and $69 for non-members, but some may be free to CMA members, depending on the topic.

We hope this list is helpful as you consider your needs for 2017.

Are there other credit-related services that you’re looking for that we currently don’t offer? Feel free to reach out to me by responding to this blog. Thank you for reading, and we look forward to your increased participation with CMA in 2017!

What are the benefits of contributing your company’s full A/R to CMA?

It’s easier than you think

 

Are you looking for an additional incentive to get your slower-paying customers to pay faster? Here’s one more: by submitting your accounts receivable data to Credit Management Association, you can positively (or negatively) affect your customer’s payment history, as the information is aggregated safely and securely with other CMA members on anscers and Ansonia Credit Data.

In your busy workplace, credit requests are constantly coming in, and it takes time to do the research to fill them out. By submitting your A/R to CMA electronically, your credit department operations will be more efficient and you will benefit from the collective results of other like companies.

Within your vertical market, the more information you submit, the more information reported, the more complete the credit reporting. In turn, those contributors will be better equipped to make business decisions based on extending trade credit. But to give you further incentive to submit your full A/R (other than providing an additional collections tool and saving time), here are some additional benefits.

  • Data submission is done over a safe and secure server, so you can be sure that your data doesn’t get into the wrong hands.
  • Thousands of companies like yours nationally contribute data to the database, accounting for more than 12 million lines of trade data, creating a greater likelihood you’ll find information about the companies you’re looking for.
  • Your actions can help reduce fraud in your vertical market.
  • Your actions support the CMA Credit Community.
  • Data contributors receive 10 free CMA Credit Reports annually.

We appreciate your support, as CMA aims to provide the most complete data to help guide your business decisions.

What are you waiting for? Call CMA’s Member Relations Department at 951-672-0581 and begin contributing now!

Announcing the New anscersX Report that combines key data from D&B, Experian and Equifax into one Business Credit Report

The anscersX multi-bureau trade credit report combines key factors from the three largest trade credit reporting agencies (D&B, Experian and Equifax), giving credit managers the most complete payment story available. “We spent time reviewing all the elements on each provider’s business credit report to determine what would give anscersX clients the best insight into their customers’ credit worthiness,” says Robert Shultz, Managing Partner of Trade Information Exchange. “By using an anscersX Report, you have covered the necessary bases at a much better cost and a tremendous time savings.   The anscersX Report provides a quick review of the information needed for most trade credit decisions.”

Credit Management Association® and Trade Information Exchange are proud to announce that they have produced the anscersX Report, a single report that contains all the key elements about your customers’ paying habits needed to make most credit decisions.
Credit Management Association® and Trade Information Exchange are proud to announce that they have produced the anscersX Report, a single report that contains all the key elements about your customers’ paying habits needed to make most credit decisions.

The report, which is available now at www.anscers.com, ranges in price from $29.95 to $64.95, depending on the number of reporting agencies the user requests. Users control which reporting agencies are accessed for the report.

“The anscersX report offers some real advantages to anyone making a credit evaluation,” said CMA president Kim Lamberty. “Single-source Business Credit Reports are made up of accounts receivable data that has been contributed by companies, public record data and scores generated from the combination of this data. Since most companies that contribute accounts receivable data only send it to one provider (D&B, Experian or Equifax), using one report may only provide a piece of the payment habit story.”

The anscersX Reports are available through CMA’s web-based platform anscers.com. “The anscersX Report is a significant proprietary credit offering to our customers,” Lamberty added. “A key feature is the summary section that displays scores from all three providers, plus other key data. This makes the anscersX Report easy to read and comprehend so users can make faster credit decisions. There are other advantages as well. This is a web-accessed report that can easily be ordered and received at the user’s workstation in seconds, all at a low cost. There are no minimum purchase or contract requirements. The users order what they want, when they need it and only pay for the reported results.”

Several CMA Members have already used the anscersX Report and have had positive experiences with it. “We got an answer in minutes as opposed to calling all the trade references on the credit application,” said Mary Donaldson, Office Manager, Worthen Equipment Inc. Grating Pacific Inc.’s Stacy Henry added: “The enhanced anscersX Report is very intuitive and easy to read. The “Summary” section at the top of the report included all the information I needed to make my decision whether to extend credit. That saved me a lot of time.”

To learn more about the program, visit www.anscers.com or call 800-541-2622.