11th July 2014 Posted by Warren Paull
Significant changes are happening across many organisations as they shift from a culture of focusing on profit margins alone, to focusing on risk management in order to be able to maintain strong sales. However, companies can only effectively implement real cultural change if they are aware of current risk management structures and policies that are in place
In addition, there are many external regulatory pressures that are often sufficient motivators for improving risk management practices. It is important to recognise that with every sale made there is also a level of risk involved; finance executives must know and be able to overcome the common threats associated with growth, ensuring that the steps they take today don’t create additional problems in the future.
This will result in a more efficient credit management process for evaluating credit worthiness before any sales can be confirmed. Making the best use of your finances should be a key component in business planning and every element of working capital should be wisely controlled in order to maximise free cash flow.
Managing risk correctly in real time can allow companies to anticipate potential customer collection concerns; credit managers can in fact be proactive in addressing payment trends before risk events occur.
Providing your credit managers with the information they need in real time gives them a valuable tool to assist with important strategic risk management decisions.
Failing to manage risk adequately can jeopardise the accountability of the organisation, so it is important to recognise threats that may arise in the future by having poor judgment today. Real-time risk management offers an opportunity for organisations to improve their credit department and working capital as a result of mitigating negative outcomes in the future. Real-time risk management strategies can be applied for better management of risk factors: After all, the main outcome of any strategy using analytics should be the added value that it can provide to the company as a whole.