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Risk Mitigation
What is a Collection Agency?

Credit Risk Management is protection

Credit risk management services and programs with AAB risk management services will reduce write offs and prevent loses. Managing credit risk is critical to a company’s financial health in the form of profit and loss. So what are some of the protective components of effective credit risk management?

It should be noted that AAB has 40 years of experience in credit risk management. Our methodology of managing credit risk is simple. We look out for our client’s best interests by protecting them from excessive risk. Every company is exposed to rick whenever they grant credit. Credit in turn helps increase sales revenues. The right balance between sales and acceptable risk is the goal of credit risk management.

Credit Risk Management initiatives

Credit risk management has numerous layers and every company has different needs. While there are too many layers to cover in a web page here are just a couple of points that are considered with credit application basics using credit risk management.

Credit applications are the starting point when improving a company’s credit policies. Here is one example we see on a regular basis. A company uses their standard credit application for all their customers throughout the United States. One of their big customers has problems and is unable to make payment and litigation is inevitable in order to avoid a total write off. However, an agreement that is perfectly legal in several states turns out not be unenforceable in other states. This is why using a one size fits all strategy doesn't work with credit applications and breaks one of the cardinal rules in credit risk management.

Consumer consent is often another risk factor when not covered in a comprehensive credit application. Retail consumers need to provide consent to having their credit investigated. The risk here is being sued by a consumer for doing a simple credit check without written authorization. This in turn gives a debtor a valid defense and exposes the creditor to liability. It should also be kept in mind that some states are enforcing written authorization when dealing with commercial customers. Yet another minor layer that needs to be considered in a proper strategy for credit risk management.

Credit Risk Management in simple terms, is plugging holes, loopholes or risks that could potentially leak money. Just something as minor, as a poorly designed credit application can damage your bottom line years down the road. Avoiding these type of pitfalls or expensive surprises is the main objective of risk management.

AAB Credit Risk Management

Experience takes the guesswork out of credit risk management. This is why AAB is constantly monitoring the latest industry protocols and legislative changes that affect our Client’s industries. What is the best way to implement tangible credit risk management?

Simply give us a call and an AAB professional will walk you through the steps to creating an firewall or risk management strategy. You can also arrange or schedule a free consultation on Credit Risk Management

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