Should You Use Artificial Intelligence in the Credit Review Process?

In simple terms, artificial intelligence (AI) is the ability for machines to learn and to perform functions normally requiring human intelligence or decision making. AI can be applied in many ways across the credit-to-cash function. Credit teams can rely on AI to monitor risk, provide alerts and even take action when there are changes in a variety of key data elements that make up a risk profile for your customers.

Risk assessment is not a one-time, or even an every-once-in-a-while thing. To be effective, risk should be monitored frequently and consistently. Companies that maintain a customer portfolio consisting of thousands of active accounts, are not able to manually review each one frequently enough to protect themselves from risk. In fact, many large corporations simply rely on the fact that their main customer base is made up of other large corporations who are able to pay most debts. This, unfortunately, creates a false sense of security and leads to unhealthy practices and procedures. As mandates are applied to do more work with less resources, account reviews are pushed out or even skipped all together. It’s simply impossible for even the most seasoned teams to keep up with that many accounts manually. This is where AI can be leveraged.

Leveraging a credit function with AI at the center, allows your team of credit professionals to focus on the very valuable financial analysis and credit worthiness reviews. With AI, the machine is constantly monitoring internal and external factors to notice any trends or patterns. Each customer profile, manual action taken and subsequent outcome provides an enormous learning resource for the AI engine to continuously improve its ability to proactively identify pitfalls. An AI engine uses complex algorithms to calculate the outcome of thousands of scenarios to determine the likelihood that a customer will go past due within the next 60 days if all other factors remain constant. Based on these calculations, an AI engine can alert your credit team to high risk customers to mitigate risk exposure quickly.

Employing AI in the credit review process provides a great opportunity for sales teams as well. Generally, credit teams are focused on limiting risk and rarely are afforded the time or authority to proactively extend credit to those companies who have improved financials without a request being placed by sales. Sales leads can be generated by an AI engine based on past ordering habits, current financial position and additional external factors. The AI engine can not only extend the credit lines automatically, it could provide suggested sales calls to your sales team based on these many factors.

The underlying premise of AI is that with more experience, the decisions and results will become better. Frequently, unintended additional benefits arise from leveraging AI as well. The question is not “should you use AI?”, but “why haven’t you started improving results by using AI already?”