Gone are the days where businesses had to rely upon paper-based applications when assessing new clients that sometimes took weeks to complete. Things are now much quicker but in this challenging operating environment, performing proper due diligence prior to approval of credit applications is crucial. To accomplish this, you may need to automate your client onboarding, leveraging online credit application tools.

A robust online customer onboarding process is your first line of defence in reducing your credit risk exposure. In the current environment, it’s never been more important to ensure that the information provided in credit applications is both accurate and comprehensive.

The collation of data is only one component of conducting effective due diligence. Performing credit checks on every company you engage with is imperative to safeguarding your business from risky applicants and ensuring you only partner with the highest-quality clients. Thankfully, company credit reports are offered as part of the application process on some online platforms.

Adding due diligence checks to your customer onboarding process allows your business to make more informed decisions around which customers to approve and may save the Accounts Department considerable time and effort chasing missing information.

Upgrade your customer onboarding: why you must digitise

Ditch dirty client data

If your business struggles with dirty client data, the rot typically begins in the onboarding process. Dirty data can not only prevent a business from approving new customers, but also from being able to follow up with a client if late payment does occur. The most common way that dirty data occurs is when new client information is filed incorrectly, or applicants provide incomplete applications – whether deliberately or by accident. In some instances, sales reps can be so focused on securing a deal, they may rush through the details of the application to secure a signature. For businesses still relying on paper applications, there is additionally the risk that illegible handwriting will result in confusion or gaps in information.

By switching to online credit applications, you may be able to prevent instances of dirty data, fast-track client applications, and improve the Days Sales Outstanding (DSO) from late paying customers.

Reduce time chasing information

Accounts departments in particular will benefit from a streamline, simplified credit application process. Manually verifying information and processing individual applications can divert time away from higher-priority tasks. Onboarding platforms such as ApplyEasy assist in automatically verifying customer data upon completion, which is invaluable for reducing time wasted.

Further, if the client does not meet their repayments, online onboarding allows them to be followed up efficiently. Paper-based applications may only include one or two points of contact, and if dirty data is present, this debt could easily go unpaid. Processes that may have once taken hours, could be reduced to a matter of minutes.

Improve the quality of your customer base

Pivoting your customer onboarding to automated online credit applications may also boost the quality of the potential applicants you approve, through:

• Automatic information verification – Client information is checked for you automatically against a database of ABN, ACN and DIN details, business addresses, contact details, and accounting details. Your business is not at risk of engaging with fraudulent entities or directors that have engaged in illegal phoenixing activity.
• Automatic reference checks – By streamlining the checking of trade references, your business can put ideal clients on the fast-track to approval, and easily identify entities for rejection.
• Customisation features – You may have the flexibility of adding any specific questions or forms you would like customers to provide and making them compulsory for application completion. This way potential customers are giving you all the details you need, and you’re weeding out risky entities that may not meet your internal criteria.
• Company Credit Reports – Most significantly, online credit applications may come with additional support in the form of credit reports. Nowadays, it is necessary that businesses perform a credit check on every company they work with – big or small. Platforms, such as ApplyEasy, engage with a credit reporting agency like CreditorWatch to provide you with necessary information around the credit history and credit risk of the entity. If a potential customer has a history of adverse events, such as late payments or default, your business can make data-driven decisions to approve or reject their application.

Business credit checks: your secret weapon against credit risk

It is more important than ever that you run a business credit check on every single new customer as part of the onboarding process. This isn’t just limited to customers; credit reports can be invaluable for new suppliers and trading partners too.

Running a business credit check on any new customers will allow you to assess their creditworthiness and analyse how likely they are to pay your business on time. You’ll be shown the business’ credit history, including any late payments, registered defaults, ATO tax defaults, court actions, cross directorships, and other adverse data. With a deeper understanding of their comprehensive financial history, you can use the knowledge provided to inform high-level decision-making on future trading.

Credit checking and customer onboarding walk hand in hand. If your online credit application platform does not offer business credit checks, it is worthwhile engaging with a credit reporting agency such as CreditorWatch.

With the right mix of technology and know-how, you can protect your business and secure its future.