The role of automation in the credit industry

Australian businesses are emerging from the pandemic performing better than expected. We have accelerated our adoption of technology over the past year; automation has been a valuable tool in helping businesses adapt and thrive. But is there such a thing as too much automation?

CreditorWatch’s George Wolf and Josh Mann from Brisbane and Rob Willoughby from Sydney share their insights. We discuss the importance of having skilled staff to utilise digital solutions. Ultimately, the success of automated systems relies on well-trained teams who know how to interpret data and act accordingly.

Australian businesses are performing well post-pandemic

Australia’s economy has exceeded expectations as it emerges from the pandemic. Our GDP has grown by 1.1 per cent over the past year and 1.8 per cent in the March quarter.

George Wolf, Queensland Sales Manager, observes, “Australians have been staying home and spending money locally on goods and services. With government stimulus like JobKeeper, many Australians have seen a surge in disposable income, which they have spent in local businesses. Lowered interest rates and new housing subsidies have also increased incentives to build new houses, boosting local industries like construction, transport and logistics.”

Josh Mann, Senior Business Development Manager, adds, “Businesses that have good relationships with their customers tend to emerge in a better position. During the COVID-year, they reached out to see where their customers were at, instead of burying their heads in the sand.”

According to Rob Willoughby, NSW Sales Manager, “The COVID-induced downtime has given businesses lots of time for self-reflection – to examine their internal systems and understand the gaps in their business– and ultimately improve the way they do things. We are now seeing the effects of this as we accelerate out of COVID.”

Too early to be overly optimistic – true economic recovery yet to be revealed

While the economy is looking better than expected, payment defaults and external administrations rose in May 2021. CreditorWatch’s CEO, Patrick Coghlan, notes that the true nature of economic recovery will only be revealed in the next two quarters, after some businesses stop being artificially propped up by JobKeeper.

Businesses are acutely aware about how quickly things could change. Insurance costs have also skyrocketed since the pandemic hit. To stay resilient, businesses have increased their due diligence by stepping up on credit monitoring and lodging PPSR registrations to protect themselves against customer insolvencies.

Accelerated adoption of technology over the past year

According to a report by McKinsey, we have accelerated five years forward in consumer and business digital adoption within a period of eight weeks. With the rise in remote working, people now have increasing access to data, across multiple systems, more quickly than ever before. SMEs are increasingly incorporating automation to simplify and streamline their processes, using digital solutions to help them adapt and scale.

However, our experts warn that businesses need to be cautious about over-reliance on technology. It’s important to find a balance when implementing automation – businesses cannot be entirely dependent on tools to do job for them.

Successful implementation of digital solutions requires skilled and qualified teams

Wolf expresses his concern for businesses that are relying too much on automation and employing less qualified staff, creating future generations of teams with deteriorating skills and abilities. Mann agrees, “Digital solutions help to inform our conclusions, but businesses still need employees to make informed and educated decisions about what to do with the data. There needs to be careful consideration behind the application of these tools.”

Willoughby explains that the point of automation isn’t just about adding more data, but to prioritise urgent actions and make informed decisions quickly. For instance, by the time a company is taken to court, it has likely already accumulated debts with other suppliers. Automated systems help to identify potential risks before it gets to that stage, enabling businesses to take necessary precautions as soon as they find out. The key is ensuring that your credit team knows how to utilise this information and act upon it.

Furthermore, machines are unable to accurately process exceptions to the rule or data anomalies. A skilled credit manager will be able to identify variables that an automated system has not factored in. “If credit teams rely solely on their digital system, they could potentially be putting away good risk and adopting bad risk,” Wolf warns.

Businesses need to invest time and money in training and educating staff. “It’s not enough to merely teach them how to use software – they need to be able to critically analyse data and processes,” Mann advises.

Willoughby concludes with a reminder that technology can never replace the element of human connection. “Lots of businesses are relationship-driven. In sales and customer service, it’s all about picking up the phone and developing a relationship with the person on the other end,” he says.

Businesses that are increasing their uptake of digital tools should be using automation to support, not replace, their experienced teams. Along with technological developments, it’s important to also focus on retaining talent and developing their employees’ skills and capabilities.

How CreditorWatch can help

CreditorWatch provides tools to make credit risk management quicker and easier, such as:

• ApplyEasy to streamline credit applications
• DebtorLogic to simplify debtor management
• PPSRLogic to manage PPSR registrations
• Risk Score to quickly evaluate risk across your entire client portfolio

With 24/7 monitoring and alerts, CreditorWatch highlights urgent events that are occurring within your portfolio, enabling your credit team to make informed decisions and take appropriate action.

To learn more about skilfully implementing credit risk automation, get in touch with one of our experts today.