Balancing data and instinct: How credit professionals make smarter decisions

Everything in life is a balance—an even distribution of weight that allows someone or something to remain upright and steady. Without balance, even the strongest structures falter. In credit management, the same principle applies.  

Why it matters: For credit professionals, major decisions are not driven solely by numbers or intuition, but by careful equilibrium between data-driven analysis and critical thinking. That balance is what delivers stability, resilience and sound judgment in navigating financial risk.   

Every credit decision begins with a framework. Before onboarding a customer, many credit professionals start by evaluating the company’s creditworthiness using the five Cs of credit: capacity, capital, conditions, collateral and character.  

The first four Cs provide a data-rich picture of a company’s financial standing. For instance, capacity reflects the ability to repay debts on time while remaining profitable. “We look at a customer’s credit report and, in some cases, request financials to determine the strength of the business,” said Linda Pratt, credit manager at Lansing Building Products (Waltham, MA). “We also rely on trade references, previous history, online resources, sales input and, in some cases, calling the owner directly to gather insight.”  

Conditions capture how external factors, such as market trends or economic shifts, may affect the company’s performance. “We keep in mind that businesses in the agronomy industry are significantly affected by rising prices and input costs,” said Nate Yagle, VP of credit at Premier Companies (Seymour, IN).   

Even with a strong framework, decisions can be difficult, as the data doesn’t always reveal the full picture. A strong payment history, for example, doesn’t guarantee that the company has the resources to repay future debts. Conversely, a company with a low credit score may still maintain multiple streams of income that support repayment.  

“Typically, customers brand-new to the business won’t qualify for larger amounts of credit because they don’t have sufficient financials to support them,” said Bonnie Wells, CICP, senior credit manager at SanMar Corp. (Issaquah, WA). “But if they receive an extra large order, we will certainly find a way to work with them, even without a payment history.”  

In many situations, determining the best path forward requires deeper judgment and intuition. “When it comes to extending terms during a seasonal spike or helping a customer through a temporary challenge, experience and judgment play a much bigger role for us,” said Wells. “The goal isn’t simply about mitigating risk; it’s about enabling customer success and building relationships that endure.”  

Character—often measured by trustworthiness, reputation and perceived integrity—can outweigh high credit risk. “If the figures aren’t satisfactory, you have to rely on your own experience and level of trust with the customer,” said Yagle. “Oftentimes, you have to consider if they’re willing to do everything possible to pay you on time. Are they willing to work with you, restructure or at least answer the phone when you call?”  

Decision-making takes practice and is rarely done in isolation. The sales team often brings essential context and established relationships that enhance risk assessment. “We encourage our salesperson to send in new credit applications as they come in so we can get the process started,” said Pratt. “If you do your due diligence and collaborate with your sales team, you should have enough information to make a judgment based on both facts and gut instinct.”  

The bottom line: Credit management is both an art and a science. Striking the right balance between data and intuition helps you reach mutually beneficial outcomes. “You’re not going to be right every time,” said Yagle. “Taking losses is just the cost of doing business. Just don’t be afraid to decide.”