At a glance
Artificial intelligence (“AI”) is allowing credit managers to spot signs of financial trouble long before they appear on Companies House. Bespoke, in-house tools are emerging as the new secret weapon for risk-savvy finance teams. But beware, over-relying on robots could land you in hot water if you forget to add a human touch.
Forecasting the future without a magic wand
If you’ve ever wished for a crystal ball to tell you which of your customers was about to go bust, good news, tech might be getting close. AI is fast becoming the Sherlock Holmes of the credit world, spotting clues in places the human eye just wouldn’t be able to see.
Forget dusty ledgers and filed accounts. These days, it’s all about real-time data, behavioural shifts, and patterns that scream something’s up, even when everything looks squeaky clean on paper.
Retiring your old spreadsheets
Traditionally, credit checks have relied on historic data, such as last year’s accounts, payment patterns, or whether a company had a director called Nigel who’d been bankrupt three times. All of which usually ends up dumped into a spreadsheet for someone to squint at once a year. But that’s not enough anymore. In today’s economy, things can fall apart faster than a wet cardboard box in the rain.
AI is transformational, it can analyse vast amounts of information in seconds identifying everything from supplier payment timings to social media posts and red flags before they become full-blown disasters.
Here’s the twist, it’s not always about what’s there. Sometimes, it’s about what’s missing. If you notice a usually chatty customer has gone radio silent, it could be flag that something isn’t quite right.
Moral of the story? Ghosting is not just be rude. It might be a warning sign.
Building better credit decisions – one tool at a time
Progressive firms are now developing their own in-house AI tools. Why? Because they are recognising that generic scoring models can’t always differentiate between a wobbly business and one that’s just had a slow quarter.
Custom AI systems look at sector-specific trends, distinct customer behaviours and internal financial and sales data.
These systems adapt quickly. When risks shift in sectors like retail, construction, or tech, you don’t have to wait for a third-party platform to catch up. You should tweak your systems accordingly.
Automation that actually helps (for once)
AI isn’t just effective for flagging problems; it’s also a great time saver. Some credit teams now conduct daily automatic check-ups on their key customers. The system crunches the data, spits out alerts, and the credit team can swoop in like financial superheroes. This is particularly crucial given the sharp increase in company insolvencies since the start of 2025 and the domino effect this can have on even the strongest of businesses.
Automation can monitor payment patterns, detect cash flow and escalate cases before they turn ugly. It’s like having a dedicated colleague who never sleeps, never complains, and knows more Excel functions than you.
Even bots need supervision
However, here’s where things can go wrong. AI is smart, but it’s not infallible. AI models can only learn from the fata they’re given. If your data is outdated, incomplete, or just plain unreliable (and let’s face it, sometimes it is), the predictions could be way off.
Over-relying on automated scoring carries risks. Human judgment remains essential, especially when you have a customer doesn’t fit the typical mould or sometimes more importantly, when you get the gut feeling that something is not quite right. AI is a powerful tool, but it won’t stand up in court with you when things hit the fan.
Brains and bots: a credit dream team
Insolvency rates are rising, risk profiles are shifting, and the margin for error is slimmer than ever. But there’s a silver lining. Teams that combine AI tools with strong commercial instincts are far better equipped to dodge the disasters and safeguard their cash flow.
So, can AI predict the next insolvency? Not quite like a fortune teller, but it can provide valuable early warnings, and in today’s landscape, that’s often enough to keep you one step ahead.
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