BlackLine recently introduced the first of its kind accounts receivable automation capabilities, which use behavioral analysis to provide real-time insights on customer risk and growth opportunities.
The ability to tap into key insights about payment practices could help to significantly improve a company’s cash flow, which is especially important given the ongoing concerns around inflation and an imminent economic downturn. In addition, since the cost of borrowing money is continuing to go up, businesses are looking internally for methods to free up working capital so that it may be invested elsewhere without having to take out loans from banking institutions.
According to the study “2022 Working Capital Survey” by The Hackett Group, the 1,000 biggest public firms in the United States had almost $1.7 trillion tied up in excess working capital in 2021. This information was gathered from the companies’ financial statements. Therefore, The Hackett Group suggests that major businesses assess and fine-tune the systems that they use for credit risk and collections management in order to account for shifting payment practices and reduce their risk of incurring bad debt.
Kevin Permenter, Research Director of Financial Applications at IDC, stated:
“Navigating the current economic headwinds means looking for ways to free up working capital, and the best way to release working capital is to better manage cash. One of the best ways to do this is by accurately assessing credit risk in real time; after all, global economic uncertainty goes hand in hand with rapid and unexpected changes to business conditions. Therefore, the more information an organization has about customer behavior in a timely fashion, the better they can assess this risk and minimize exposure to bad debt.”
Delivering Real-Time Insights with New Accounts Receivable Automation Features
BlackLine’s Customer Attractiveness Scoring, in contrast to the credit risk profiles provided by credit agencies, shows customer risk based on payment behavior as it is happening. This aims to provide credit teams with the latest risk assessment possible, one that is specific to the trading relationship, and it does so instantly.
The following are some of the capabilities that are included in Customer Attractiveness Scoring:
- Aggregated Customer Benchmarking: This gives real-time comparative data about an organization’s complete client portfolio, which may be used to establish which customers should be prioritized for either growth expansion or risk monitoring.
- User Configurable Internal Credit Scores: Instead of depending on generic scoring from a third party, credit professionals may now evaluate the behavior of clients based on the criteria they have specified on their own, which they believe to be the most essential.
- ‘What If’ Analysis Capabilities: These capabilities allow businesses to modify their internal risk model to foresee the outcomes of decisions and adjust accordingly to changes in the sector or the macroeconomic environment.
Andy Lilley, Managing Director and Head of Global AR at BlackLine, explained that companies are under increased pressure to optimize their cash positions in light of the changing global economic environment, thus they are allocating more resources to analyzing cash flow key performance indicators (KPIs), including credit risk and collections management. He added:
“In fact, we are now seeing executives being asked to report on cash flow and working capital as much as on earnings and revenues. With cash management more critical than ever, we are seeing more customers looking to BlackLine for intelligent insights, as businesses look to harness real-time data and powerful analytics to improve critical decision-making across the enterprise.”
The newly developed Customer Attractiveness Scoring is a component of BlackLine’s Accounts Receivable Intelligence solution. This capability allows customers to manage financial risks and opportunities by offering access to real-time, actionable data. This data assists customers in better understanding the financial behaviors of their customers and in using this knowledge to influence both strategic and operational decision-making. Customer Attractiveness Scoring is now offered as a common feature inside BlackLine AR Intelligence at no extra cost to customers.
“BlackLine has developed a potentially impactful product feature with BlackLine’s Customer Attractiveness Scoring which is specifically designed to help companies better navigate a tough financial environment,” IDC’s Permenter added.
About BlackLine
Companies come to BlackLine (Nasdaq: BL) because their traditional manual accounting processes are not sustainable. BlackLine’s cloud-based financial operations management platform and market-leading customer service help companies move to modern accounting by unifying their data and processes, automating repetitive work, and driving accountability through visibility. BlackLine provides solutions to manage and automate financial close, accounts receivable and intercompany accounting processes, helping large enterprises and midsize companies across all industries do accounting work better, faster and with more control.
More than 4,000 customers trust BlackLine to help them close faster with complete and accurate results. The company is the pioneer of the cloud financial close market and recognized as the leader by customers at leading end-user review sites including G2 and TrustRadius. BlackLine is a global company with operations in major business centers around the world including Los Angeles, New York, the San Francisco Bay area, London, Paris, Frankfurt, Tokyo, Singapore and Sydney. For more information, please visit blackline.com.
