Why Credit Risk Intelligence is Essential for Revenue Growth

Picture this: you’ve got a stellar roster of customers, your products are flying off the proverbial shelves and your revenue is looking good. The future is bright, but what’s that ominous cloud looming on the horizon? Uh-oh – potential late payers, threatening to rain on your parade. 

Even the best-laid revenue growth plans can be derailed when your customers don’t pay you in good time. And it’s a problem that’s been on the rise for some time now. Our recent research study Cost of Late Payments found that 86% of respondents reported that up to 30% of their monthly invoiced sales were overdue. Plus, 66% said they were typically waiting for up to $70,000 in overdue payments each and every month. Add that up over a year, and you’re looking at $840,000 of overdue payments in a year. That's a lot of money left on the table, especially if you don’t know when – or if – you'll see it paid.

You guessed it: this is where credit risk intelligence swoops in to save the day. When you dive deep into a potential customer’s business credit report, you can look at more than just their credit limit. Metrics like Days Beyond Terms, or DBT, tell you how late a business typically is in paying their bills. If you notice that their DBT is fluctuating wildly or on the rise, it could mean that their cash flow is in trouble. Or, if they have a consistent DBT, but they’re still paying lenders back, for example, 10 days late, you can use that data to make your own plans and anticipate cash flow hiccups before they become a problem.

When I asked Bill James, Customer Strategy Director for Creditsafe, which metrics businesses should be paying more attention to, these are the metrics he suggested.

• “Days Sales Outstanding (DSO) segmented by risk tier: it’s not just about total DSO – it's about who is dragging it out.
• Behavioral payment trends: Not just whether someone is late, but how consistently. A customer who’s always 5 days late is actually more predictable (and manageable) than one who oscillates between early and 60+ days late.
• Credit utilization vs. Limit: Especially relevant when monitoring existing customers – sudden spikes can signal looming cash flow issues.
• Third-party credit scores plus internal scoring: Many companies rely too heavily on external scores, but a hybrid model – combining external data with your own historical payment data – is way more powerful.
• Root-cause analysis on disputes: If a customer’s slow to pay because of recurring billing or service issues, that’s a fixable operational problem – not a credit one. Tracking this distinction can prevent mislabeling customers as high-risk.”

So, you already know that you can’t always predict when a customer will pay you, but what if they never pay you at all? Having to write off bad debt – debt you don’t believe your company will ever see repaid – is a horrible feeling. And it's a feeling that most businesses have experienced. Our research study Perils of Rising Debt and DSO found that 68% of businesses have increased their bad debt reserves by up to 30% in the last 12 months, indicating that bad debt is an increased worry for many. 

The good news is that with credit risk intelligence, you can minimize your exposure to bad debt. The key isn’t just having credit risk data; it’s having accurate, detailed and up-to-date credit risk data. With that, you can gain a deeper understanding of your customers and their financial health, as well as use technology to help you make smarter business decisions. Tools like automated credit decisioning software, for example, pull from a rich database of credit risk intelligence to give you instant answers about working with a business. When you integrate those tools into your workflows, you’re much less likely to be caught off guard by things like missing payments or customer bankruptcies.

You know the phrase like looking for a needle in a haystack, right? Well, bad lending decisions are like looking for a needle in a haystack and finally finding it, only to learn that the needle was actually a rusty old nail. Every time you sign a contract with a new customer, it’s a delicate balancing act between the revenue growth your company needs and the potential risks that each customer could bring to your business. If you make the wrong call, those customers could default, leaving you in the lurch. 

So how can you reduce those defaults? You’re only human, after all – sometimes things slip through the cracks. That’s where tools like automation come in. Automation is the name of the game nowadays, but finance professionals can be reluctant to embrace the chance. Our research study AI’s Role in Business Risk found that only 14% of finance professionals have “expert” level digital skills – not exactly ideal. As Matthew Debbage, CEO of the Americas and Asia for Creditsafe, said in our study, “Not investing in the right technologies or integrating your legacy data with credit risk and compliance platforms could leave your business open to more risks and deplete more of your cash flow.” 

Automation isn’t the enemy: it could be the key to unlocking even more revenue growth for your business and within your finance career. With comprehensive data readily available for your business, you can gauge who’s worth working with and who might leave you high and dry. Your revenue growth depends on your customers, so it’s important to optimize your workflows to quickly spot risks and determine your best customers. Using tools like automated credit monitoring helps you make smart decisions, reducing the risk of defaults down the line.