Liquidity is at present urgently needed above all by small and medium-sized enterprises (SMEs). Factor buyers currently expect speedy onboarding processes and real-time purchase decisions. Automatic AML/KYC checks complete the onboarding process. Valid data play a decisive role in this process.
Credit risk software in the Corona economic crisis for factoring companies Economic crisis in the COVID-19 pandemic
The COVID-19 pandemic is leading to a widespread international recession worldwide. Current liquidity bottlenecks in companies are already causing payment delays. Deferred payments are necessary. Payment defaults are increasing. In some industries, the corona crisis is hitting companies with a weak equity base. Lack of liquidity due to lost business and additional credit obligations for interim financing aggravate the risk of insolvency. Threat of domino effects from broken supply chains and sales markets exacerbate the overall economic situation.
Factoring companies offer certainty
Industry experts agree that factoring will become increasingly important in the coming period. Stephan Ninow, Managing Director of abc finance GmbH, also states in a statement: "Factoring can be a decisive element of corporate financing, especially now, because it offers one thing above all else: certainty."
Which software solutions are now in demand for the credit risk management of factoring companies?
Fast onboarding, fast debt purchases
Automatic identification of factoring customers and debtors
Automatic identification and master data checks of factoring customers and debtors are carried out with access to reference data stocks of nationally leading credit agencies and trade credit insurance companies via an API gateway with worldwide partners.
Credit risk checks and early warnings of impending bad debts
Automatic combinations of credit risk information from credit agencies and trade credit insurers with the evaluation of own payment experiences and financial analyses, e.g. on liquidity and debt ratio, result in a complete picture of the credit risk. The effects of the crisis on the liquidity and creditworthiness of companies are simulated and forecasts of future financial developments are transparent. Carefully selected indicators and key figures flow into the early warning mechanism. Delays in payment and potential defaults are detected immediately.
Secure application and monitoring of trade credit insurance limits
Risks must be reliably identified for limit requests in the databases of trade credit insurers. It is important to correctly assign the respective policy of the factoring company or the factoring recipient. The required limit amount is determined on the basis of the obligations. Clever systems recognize limit hierarchies in the dataset, especially with 1:n relationships of debtors and limits. Particularly in an economic crisis, the limit levels must be reviewed and adjusted if necessary.
Fast and efficient adaptation of processes and decision-making machines in the economic crisis
Software solutions must take into account the respective national, current risk situation in the countries and industries and use it for workflow control and decision engines. Updated credit policies of factoring companies can be adapted very easily and quickly with modern workflow management systems (Business Process Model Notation (BPMN)) and flexible decision engines (Decision Model and Notation (DMN) Engines). Fast reaction options are of particular importance in an economic crisis, because payment delays and defaults have a direct impact on the working capital of factoring companies.
Instantly available portfolio analysis for risk mitigation strategies
Immediately available portfolio analyses with a structuring of the credit risks according to debtors, industries and countries are the basis for risk mitigation strategies of the factoring companies against own bad debts.
SCHUMANN offers factoring companies a quick access to modern software solutions. Technologically, a SaaS software product is available. In current projects, we start with a minimum viable product (MVP). In the economic crisis, factoring companies can react very quickly with efficient and effective credit risk management without straining their own IT resources.