For many credit professionals, LinkedIn and Facebook may not be usually viewed as sources of important credit risk management information. When it comes to LinkedIn, it is often perceived as being mostly about finding new clients, a new job, or prospective employees. And for Facebook, it is primarily about reading, posting and enjoying all of the endeavors of our family members and friends.
But over the years that I’ve been on LinkedIn and Facebook, more and more I have found them to be indispensable credit risk management tools in helping me to understand the dynamics of a company and its current and past leadership. Let me take a moment to outline how I have been using these social media platforms to get in between the credit risk management lines.
Company Profile Pages – Many companies have set up a profile page on LinkedIn in order to announce certain events, changes in leadership, introduce new products and services, as well as post industry articles and information of interest to their followers. On occasion, you’ll see notifications that one of the company’s largest branch offices has been closed or that one of its main stay products is being discontinued. These could be nothing more than adjustments to the business climate or conversely, red flags that the branch closed due to a lack of business, or the product went from being a cash cow to a dog (as they say in the world of marketing).
In addition, a LinkedIn company page will often have at a glance many of the company’s employees as followers. This often includes the executive management in several different departments. It’s not a bad idea to reach out to some of these individuals and send them an invitation to be in your connection network. Becoming a connection often yields an email address and sometimes even a direct telephone or mobile number.
Executive Management Backgrounds – Usually when a credit application is submitted, the only information you have on who the executive management team is includes the name and title. That’s not exactly a lot of information. However, if the executive team members each have their profiles on LinkedIn and Facebook, it can provide a plethora of valuable information for your present and future use. From employment history to who is married to who, LinkedIn and Facebook can provide the professional and personal details of the executive management that could be quite useful down the road.
Employee Transitions – Every day when I log in, among all of my contacts, LinkedIn provides me with who’s birthday it is, who’s having a work anniversary, and who has a new job. When I see that an individual who had been working at a company as part of the executive management is now working at a competitor’s company, I think to myself, “Perhaps he has jumped a sinking ship or the sinking ship had to throw this person overboard to stay afloat.” Either way, if one or more of the executive management are recently in new positions, or their profile does not have them in any current position, it may be allude to the idea that the company is not in a healthy financial situation.
Subsequently, I also do a little cross checking on Facebook to see what might be posted from a high level employee who’s suddenly no longer at the company. Sometimes I come across posts that are joyful and pleasant, and other times I might see some negativity. On occasion, I have come across a few disparaging comments about their former employer which can be very telling. Although it’s not a smart thing to post, it nevertheless goes into the mix of questioning whether the company has some stability issues.
Number of Employees – Periodically I do a people search on LinkedIn to see how many employees are working at a particular company and take a general count. If for example I come up with about 20 individuals, but then six months later when I do it again and come up with only 10 individuals, it is certainly a warning sign that either employees are leaving or being laid off, and the company may be having some financial issues.
Decrease or Lack of Activity – Many companies promote their events, news, and articles through their employees’ LinkedIn accounts. This is often a promotional strategy to maximize the outreach by using the connections of each employee. For example, if a particular employee at your customer’s company who has 1,000 connections had been announcing events and news through their share updates, but for the last several months has been quiet, this may indicate that things within the company are not as active or positive as they once were.
Although I know as credit professionals we are very busy with all of our day to day responsibilities, incorporating social media into the credit risk management process can support the ongoing monitoring that we rely upon. In general small movements or change in a company’s on-line activities may seem harmless. However, gradually these little changes can add up and act as warning signs for payment issues that we may never have thought possible.
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