Digital Transformation » Technology » Credit Management » Rimilia is rethinking how finance leaders understand credit risk

In an age of increasing uncertainty, being able to have as much visibility as possible on your cash flow position is crucial to any company’s future prospects.

Ask any finance leader how important it is to understand their organisation’s cash position and they will tell you it is vital for determining current and future decision-making. The old adage that ‘cash is king’ applies as much as ever – the more certainty you have around current and future cashflows the more ability you have for effective decision-making to drive future success.

But for many corporates, a failure to have adequate real-time information means that they are lacking the understanding of how and when customers are likely to make payments. This means that not only are they lacking clarity on how to ensure an efficient capture of payments, but the ability to plan ahead is hindered.

Given the increasing set of challenges, growing complexity, increasing levels of disruption in every sector, and an ever more uncertain geopolitical landscape, means CFOs and finance directors need to have clarity in order to ensure continued success for their organisations.

To overcome these challenges, Rimilia has created an AI Platform to address this.  The ability to understand in real time how a customer’s payment performance is tracking to allow not only process efficiency but more importantly understand a  “ customer attractiveness score” and the ability to understand their profitability, time to profit, and changing payment trends add value to your organisation and if your own internal credit risk is better or worse than that provided by an external agency. All of this in real time provides Finance Professionals with the ability to better understand the working capital position and improve forecasting etc.

An insight

Rimilia is using a combination of artificial intelligence (AI) and machine learning (ML) tools to turn the information into a clear picture of how and when invoices will be paid in the future. This illustration can reveal a breadth of insights such as indications of where problems with payments may lie. This kind of early warning guidance could prove particularly valuable if the economy were to take a downturn in the years ahead.

The closest analogy to having a dynamic early warning system of this kind is the use of a sat nav that most drivers will switch on before any journey, to understand what risks or hindrances may come up on route. In essence, the Rimilia offer is about taking all the credit information a corporation will hold to make finance leaders as effective as possible in how they manage their risk and collect their money.

Driving growth

Using technology to provide these insights not only brings clarity on the credit position of a company, it provides guidance on future growth strategy.

Given that more and more organisations are looking to do more with the same or less resources, the value of technology has come to the forefront in the last few years. Why do humans do boring tasks that robots can do? This is not to replace humans but to allow humans to do more value-added tasks.

That leads us into areas of greater human effectiveness. If finance staff can be taken away from non-value-added work and then deployed to value-add tasks, they can perform these tasks more intelligently and efficiently, improving your key performance metrics.

A critical demand from investors is for businesses to have liquidity in the business and to have a low level of debt, i.e., one of the largest assets in the balance sheet is going to be debtors. So if a company can be efficient and effective in collecting cash from their customers, that improves the EBITDA and borrowings of companies. More cash in the bank means lower gearing but it also creates opportunity cost or value, cash can be invested for better returns, so the cycle goes on in a positive way.

Conversely, if you don’t collect cash effectively, there may be challenges, which affect profitability and reduces your capacity to invest in new technology or other areas that can drive growth.

In order to be as agile as possible, finance leaders need to understand their organisation’s appetite for risk. This is why Rimilia is building dashboards and reports that make it simple for finance leaders and the rest of the C-suite to understand where they stand with debtors.

Ultimately, companies that spend a lot on making sure they pay suppliers on time, also deserve to be paid on time and be able to clearly understand their credit risk profile. Now is the time to invest in technology that provides finance leaders with the intelligence to effectively navigate the economic environment ahead.

For more details, visit Rimilia’s website: www.rimilia.com