Which process is primarily involved in the monitoring of customer credit risk?

The process primarily involved in the monitoring of customer credit risk is internal scoring from credit agencies. This process utilizes data from various credit agencies to assess the creditworthiness of customers, enabling organizations to evaluate the risk of extending credit or conducting business with particular clients. By considering factors such as payment history, outstanding debts, and financial stability, internal scoring provides valuable insights that help businesses make informed decisions regarding credit limits and payment terms.

Monitoring customer credit risk is essential for minimizing financial losses due to defaults and ensuring healthy cash flow. The internal scoring process effectively synthesizes external credit information into actionable scoring models that assist finance departments in effectively managing risk.

In contrast, other processes listed, such as inventory management analysis, payment advice processing, and supplier payment negotiation, do not directly relate to assessing or monitoring customer credit risk. Inventory management focuses on maintaining optimal stock levels, while payment advice processing deals with transactions related to payments made by customers. Supplier payment negotiation pertains to terms and conditions set with suppliers, which is not involved in customer credit assessments. This distinction emphasizes why internal scoring from credit agencies is the correct choice for monitoring customer credit risk.