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Credit risk management in My DSO Manager

Credit risk managementCustomer risk management is an essential step for preventing customers defaults and late payments. Credit risk is managed on the customer sheet and risk report in MY DSO MANAGER.

The software inlcudes:

  • a schedule of payment to have an extrapolation of outstanding over the coming months
  • a scoring tool configurable by the user
  • a tool for calculating credit limits
  • a credit analysis area including text boxes (risk analysis) and attachments (financial reports ...).
It is also possible:

  • to automatically retrieve financial information from financial information providers
  • to insert the amount guaranteed by credit insurance at customer level.
  • to insert the amount of other guarantees (bank guarantees on first demand, parent company guarantee ...).
The risk is managed at legal entity level. If multiple accounts belong to the same legal entity, the outstanding information is automatically consolidated at the legal entity. Indeed, the risk of default (reorganization or liquidation ...) concerns the entire company, not just a buyer account.

Therefore, reports (DSO, aging balance, average delay of payment ...) are visible per buyer account but also by legal entity to facilitate credit analysis.

The credit notation scoring tool

The evaluation of the creditworthiness of the company is based on materials and numerical criteria (evolution of sales and margin, balance sheet structure, payment behavior ...) and informal criteria (leadership behavior, respect of commitments, market trends ...).
An analysis solely based on database information is therefore likely to be wrong because it takes into account only half of the information needed to perform a high quality credit analysis.
The credit rating incorporates 12 additional and customizable criteria to calculate the score in a few moments on the most complete basis.

Credit limit calculation tool

This tool takes into account the result of the buyer's score (from the credit notation). The credit limit is calculated in two steps in MY DSO MANAGER:

  1. Definition of the need of credit limit based on sales forecasts and payment term granted. The result is called "theoretical Credit Limit"
  2. Weighting that limit with the size and financial capabilities of the buyer based on 2 criteria: company turnover and tangible net worth (can be customized). For example, if the result of the credit rating is "A" (the highest rating), the credit limit will be capped at 8% of sales and 50% of its tangible net worth.
The validation of the proposed credit limit is done by taking into account conclusions of the credit analysis.

The credit analysis

This part includes a free text field for entering and historicize all events and analyzes done for each buyer.

It is also possible to attach documents such as balance sheets and other financial documents such as bank guarantee or parent company guarantee.

Customer risk management features enable to carry out:
  • a credit scoring
  • a credit limit calculation
  • a credit analysis to be historicized

Credit risk monitoring

The risk report gives a comprehensive and global view of customers risk and allows to immediately identify the customers who are above their credit limit or have no more coverage. It includes all the essential information:

  • global outstanding (somme de toutes les pièces non soldées dont les effets en circulation).<:li>
  • overdue amounts by customers
  • credit insurance guarantee
  • other guaranties (bank, PCG...)
  • real risk corresponding to the outstanding less the sum of guarantees
  • credit limitt
  • outstanding available corresponding to the credit limit minus the outstanding
As with all reports of MY DSO MANAGER, the risk report is usable by customer group, collector and internal actor attached to customers (sales manager, sales assistant ...).
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