Multiplying risks, accelerating payment delays, pressure on human resources, lack of appropriate digital solutions... Managing trade receivables is becoming increasingly complex for finance directors and credit managers, who are actively hunting for effective tools to anticipate and manage risks more effectively. And you, what kind of pilot will you be in 2025? 5 advices to give you a clearer picture.
In our poly-crisis world, companies now have to deal with an increasingly complex environment, in which the commercial risks involved are multiplying. The roles of CFO and credit manager are becoming ever more demanding and strategic. Despite the existing tools and processes for preventing certain clearly identified threats, there remain a range of factors affecting a company's financial security. The sheer number of analysis tools that must be managed and their lack of interconnection, the failure to provide access to reliable and easily actionable information, and the rise of ‘new’ risks are all current challenges for CFOs and credit managers. As we enter 2025 (and its resolutions!), Coface provides you with THE checklist you need to follow if you want to manage your commercial risks more effectively.
Do you anticipate (geo)political risks when contracting abroad?
(Geo)political risks have risen sharply since 2020, and are now on an unprecedented scale. With more than 70 countries facing national elections and half the world's population voting, 2024 was a pivotal year for both (geo)political stability and global trade! This is reflected in the record levels reached by Coface's political and social risk index .
Armed conflicts, diplomatic tensions, political and social crises, monetary instability, economic sanctions and regulatory uncertainty can suddenly disrupt supply chains or restrict financial flows. To protect yourself effectively against these external events, be sure to target their potential impact effectively upstream. Asset freezing, property confiscation, trade restrictions or even expropriation: these can lead to direct losses for a company based abroad. Guaranteeing payment of invoices issued, through trade credit insurance solutions, is becoming a must-have for any exporting company. And this is true even in a seemingly favourable context: your commercial partners may be indirectly affected by political risks in other countries and, in the end, generate a payment default towards you!
Do you consider the impact of natural disasters as part of your risk management?
Taking environmental risk into account is now a must for corporate finance departments. Following the example of cyclone Chido in Mayotte and the spectacular floods in Spain, natural disasters are expected to cost our economies almost 294 billion euros in 2024, up 6% on 2023 (1). With climate change becoming ever more marked, this phenomenon is set to intensify in the years ahead.
One big problem is that there is currently no tool to warn you of a natural disaster that could affect a trading partner based in another geography. Although Coface cannot predict a disaster, we can help you to assess a partner country's vulnerability to climatic events, thanks to our global network, permanent monitoring and data quality. We can also provide you with the information you need to adopt the appropriate measures if necessary.
How to anticipate late payments and business insolvencies?
As late payments increase and business insolvencies continue to climb above pre-Covid levels (2019), payment behaviour continues to deteriorate in the world's main economies! And this applies regardless of their size or sector of activity. Trade Credit Insurance, Business Information or Debt Collection services: Coface solutions exist to deal with unpaid debts, recover receivables efficiently and protect cash flow from a domino effect in the medium and long term.
How do you overcome the pressure on human resources in trade receivables management?
Too often, within companies, only a limited group of employees master the tools and processes needed for day-to-day risk management in terms of knowing their customers. The result: if experts leave or become unavailable, companies will face disruptions to their operational efficiency, as well as to the continuity of their decision-making and financial processes. This is an additional risk that can lead to non-payment, which is all the more significant if receivables management is based on several analysis tools that are not connected to each other, leading to a dangerous fragmentation of information.
What digital levers can you activate to better control your risks?
Increasing numbers of unexpected late payments, lack of visibility of your entire risk portfolio... Faced with the amount of information you need to analyse and update in real time, and the growing number of specialist software applications you need to use, the roles of finance directors and credit managers are becoming increasingly complex. Not to mention the fact that they don't always have the appropriate, high-performance tools at their disposal! Equipping themselves with connectivity solutions that provide the right information at the right time has therefore become one of the key issues for the survival of businesses.
Coface APIs enable CFOs and Credit managers to embed Coface services where it makes more sense for them. With our APIs, you can:
- integrate accurate and up-to-date information from Coface database in their day to day business workflows
- create your own tracking indicators
- automate processes (ie. get and process Coface notification, schedule orders, handle huge portfolio through multiple requests, etc.)
Opportunities are endless to digitalize and optimize your business !
Manage your commercial risks with Coface solutions: Trade Credit insurance, Business Information, Debt collection and more services. Entrust it to our experts tomorrow by contacting us now.
(1) La Tribune, 5 December 2024.
