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The Credit (R)evolution

How Credit Leaders Can Uncover Growth Opportunities

Credit, traditionally viewed as a transactional adjudicator, is on a transformative journey. Gone are the days of gate keeping and manual decision making; credit is evolving into a strategic growth role. This new strategic credit team can be the fulcrum of growth. That’s right: the fulcrum. With an abundance of cross-organizational data, the strategic credit team is a key asset in identifying new business opportunities and growing their top and bottom lines. By spearheading sales acceleration and managing supplier risk, credit has the potential to drive growth.

Increasingly, the credit department is expected to support and meet organizational growth targets. The truth, however, is that credit teams need to shift their thinking in order to meet these expectations. Is the credit role going extinct? No, not necessarily. But, credit needs to reconfigure and redefine itself for growth in an era of high complexity and risk. Fortunately, the credit leader has the essential skills and tools to transition from a transactional credit professional into a strategic growth enabler.

The Evolving Role of Credit

When credit is forced to act as a gatekeeper, growth becomes static. Both credit and growth-oriented departments, like sales should have complementary goals: to drive revenue and increase profit. Traditional credit teams are responsible for reducing losses and mitigating risk; however, the new strategic credit team is responsible for managing risk as well as uncovering new business opportunities. Credit is in a unique position to help sales and marketing identify new opportunities and profitable relationships.

Credit and Finance Growing Sales

When credit and sales teams work together, growth happens. The new strategic credit team has financial insights such as payment behaviour, profitability, and failure risk that sales and marketing can leverage to open new revenue streams and business connections. Credit teams can drive growth by:

  • Analyzing their customer data to identify new business opportunities
  • Segmenting their data to outline the company’s ideal customer
  • Leveraging automation for faster, more efficient decision making

Sales acceleration begins with a data-inspired approach; however, the lack of integration between credit and sales information systems and databases limits information sharing. Fortunately, there is a solution. For credit to fuel sales, the data flowing between credit and sales needs to be centralized, cleansed, and enriched. Once this is complete, it is important to ensure information is linked. With linked data and information, sales can leverage credit insights to understand their customer’s entire lifecycle and uncover companies and industries that will drive the most strategic growth. Through data-driven credit analysis, credit and sales teams can help maximize marketing investments and prioritize sales efforts such as: improving cash flow, shortening the sales cycle, building stronger customer relationships, and increasing pipeline.

Evaluating Supplier Risk to Enable Growth

With heightened geopolitical tensions and an uncertain economic future, growth is unpredictable. Companies are searching for new ways to increase their profitability and free up their working capital. Much like credit, the goals of procurement and supply chain are to manage risk, increase cost-efficiency, and enhance optimization. One of the ways that credit can help the procurement and supply teams is through normalizing supplier payment terms. When credit is granted access to supplier payment data. It can help the procurement team standardize payment terms that benefit the company as a whole. By normalizing supplier payment terms, companies can avoid tying up working capital and instead, invest into more profitable areas of the business. 

With heightened geopolitical tensions and an uncertain economic future, growth is unpredictable. Companies are searching for new ways to increase their profitability and free up their working capital.
 

Traditionally, credit has performed what is known as spend reporting; spend reporting typically focuses on historical payment behavior. By leveraging spend analytics, credit has an immediate impact on reducing procurement costs, improving efficiency, and controlling expenses.

 

The Credit Team as a Source of Profitable Growth

The credit team is an essential ingredient for profitable growth. By transitioning into the mindset of a strategic growth leader rather than a transactional adjudicator, credit can uncover new business opportunities and spearhead organizational growth. With access to an abundance of cross-organizational data, credit is a unique position to provide growth-oriented departments the data, skills, and insights to drive new business initiatives. By leveraging these same skills, credit teams are critical in driving the sales acceleration process and managing supplier risk. Credit’s transformative journey will benefit more than just its customer portfolio, it will completely reconfigure how companies fuel their growth.

 

 

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