Attention CFOs: Are You Saving Pennies at the Expense of Dollars? Rethinking Credit Risk Strategy in Uncertain Times

By: Mike Bevilacqua, Chief Content & Education Officer, Credit Research Foundation

Abstract

As economic headwinds mount in 2025—marked by rising bankruptcies, tight liquidity and overleveraged consumers—many U.S. companies are dangerously underestimating the strategic importance of credit risk management. This article argues that CFOs who cut credit staff or offshore critical AR functions in pursuit of short-term savings may negatively impact long-term financial P&L performance. Drawing on current data from the Fed, Moody’s Analytics, the American Bankruptcy Institute (ABI), the Credit Research Foundation (CRF), and professionals and practitioners, this article explores how the retirement of seasoned credit professionals, post-pandemic complacency, and lack of downturn experience are weakening credit risk mitigation defenses. The article concludes that now is the time to reinvest in on-shore-capable, domestic credit teams who can proactively protect working capital, influence strategic decisions, and mitigate mounting credit risk in an increasingly volatile environment.

Introduction: The Hidden Cost of Underinvesting in Credit Risk

CFOs are under constant pressure to trim costs and boost efficiency. In the back office, credit and accounts receivable (AR) functions often look like ripe targets for offshoring or headcount cuts. But saving a few pennies in payroll can backfire disastrously if weakened credit controls lead to major write-offs or cash flow crises. After more than a decade of relatively benign credit conditions, many companies have grown complacent in credit risk management. In fact, nearly 40% of firms reduced their credit department staff during the pandemic, and numerous veteran credit professionals retired in recent years. This lean staffing might have seemed fine when defaults were low, but today’s environment is far less forgiving. The hidden cost of underinvestment in credit risk—missed warning signs, slower collections, and higher bad debts—can far exceed the apparent savings in salary. It’s a classic case of being penny wise and pound foolish. CFOs who take a hard look at today’s economic red flags will recognize that cutting experienced domestic credit professionals (historically or now) could mean paying dearly later. “There is simply a collective lack of knowledge on how to protect a business’s customer and receivable base in today’s economic landscape”, stated Matt Skudera, President & COO, Credit Research Foundation (CRF).