Lunch & Learn Review: Whacky world of Credit Data
CICM East of England Branch was delighted by the record number who registered, and participated in this latest of their series of regular "Lunch and Learn" webinars. Branch Committee member Steve Walsh, a director of RSM Creditor Solutions, introduced corporate credit data expert and risk specialist, Tim Wendholt of Corporate CPR
East of England's Lunch and Learn Agenda:
In his absorbing, described by Tim as slightly tongue in cheek, amusing, but highly insightful presentation Tim examined the world of credit data. This included the unusual ways in which credit data can be interpreted and what credit managers can do practically to manage such anomalies.The punchy session was aimed at helping credit managers to sharpen their skills in analysing and utilising credit data to help them make more informed decisions.
What we learnt:
Credit referencing agencies can arrive at different scores
Tim talked through a number of anonymised case examples of the type that credit managers face every day, showing how for the same company at the same time and using exactly the same information, different credit referencing agencies could arrive at significantly different scores.
Similarly he talked about how, and why, different credit insurers could arrive at conflicting conclusions using the same data but using their own scoring method. He pointed out that collating data from multiple sources, maintaining it in a fast-moving world and delivering it in multiple ways to customers was very expensive.
Aligning risk calculation
Tim recommended that credit managers should bear in mind the level of knowledge that the sales team of credit referencing agencies have, and their understanding of how their data and scores are constructed. It was worth checking with them how they calculate working capital and net worth, then aligning the risk calculation policies of the credit referencing agency to your own.
He gave his personal view on how many sources of information a credit manager should ideally use and the circumstances which might govern this decision, stressing that in the case of basing a decision on information from credit referencing agencies the risk was entirely with the credit manager and the credit insurer, who, unlike the credit referencing agency, both have "skin in the game".
Don't put all of your eggs in Companies House
He warned of the dangers of relying on Companies House information and he shared details of other factors he personally uses when making, or recommending, a risk decision. He said that the credit agencies "have herded their cats on your behalf but sometimes they hop over the fence and escape!!"
Tim outlined the changes that he was aware of in the pipeline which use AI to speed up the provision and accuracy of data.
Expert Advice for handling data
His concluding advice for credit and risk managers, before he answered the many questions from delegates, was to remember never to take data at face value, always trust your own judgement, and challenge when things look wrong or just even weird.
Tim Wendholt can be contacted at [email protected], if you wish to have a copy of the slides.
