The CFO’s Mini-Guide to Bad Debt Prevention

You have two big risks in your AR—bad debt or overly conservative risk tolerance. Pick your poison.

In an economy where every dollar counts, the smartest finance leaders are turning their attention to one overlooked line item: uncollectible revenue. Here’s how to stay ahead of it.

Understand the True Cost of Bad Debt

Losing revenue is just the surface. When bad debt hits your books, it's also dragging your entire operation. Sales time wasted. Forecasts skewed. Pipeline trust eroded.

Every $100K written off can equal up to $300K in wasted effort. Now multiply that over a quarter or a year. You’re losing deals and bleeding EBITDA.

At the end of the day, reducing bad debt is just as much of an efficiency play as a revenue one.

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Demand Real-Time Credit Risk Visibility

Traditional credit reviews are slow, static, and stuck in the past. By the time risk shows up in a report, the damage is done. That’s why modern CFOs are asking tougher questions:

• Can we spot risk before onboarding?
• Are we blindly extending credit to customers already defaulting elsewhere?
• Which accounts are quietly sliding into trouble—right now?

And look at the upside—where can we strategically lean in to well-performing customers?

Old-school reviews look backward, but modern credit leaders keep their eyes on the future.

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Align Finance, Credit, and Sales Around Risk

Sales wants speed. Credit wants safety. You want both.

Winning CFOs start setting the rules:

• Define credit policies using real data vs. hunches—and make sure they stick
• Equip credit teams to say yes faster or no with confidence
• Translate risk tolerance into business impact, not just credit scores

Because when everyone's guessing, deals stall. When everyone’s aligned, revenue moves.

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Use AI to Spot Fraud and Hidden Risk

AI won’t replace your analysts. But it will catch what they can’t.

Technology like Credit Pulse handles what no human reasonably can: scanning thousands of data points—constantly. It flags what matters before it becomes a problem (or a missed opportunity):

• Synthetic identities
• Early warning signs: adverse media, shrinking revenue, layoffs
• Positive trends: growth, hiring, momentum

You wouldn’t forecast revenue without a model. So why make credit decisions without AI?

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Own the Risk, Prevent the Write-Off

You can’t manage what you can’t see. Most teams treat bad debt like weather—something that just happens. But CFOs who invest in better visibility are flipping the script.

With the right tools, they’re spotting risk earlier, extending credit more confidently, and turning bad debt from a lagging indicator into a strategic advantage.

Reactive teams write off losses. Proactive teams write the playbook.