Is Your Underwriting Team a Gatekeeper or a Growth Tool?
Written by: Lara O’Conner Hodgson, CEO of RoxWrite, Co-Founder, Now®
Sales versus Credit – the tug-o-war continues in every organization. Sales sees a prospective client as revenue and Credit sees a prospective client as risk. This is a healthy tension that must exist for a company to grow profitably. If Credit thinks like Sales, then your organization will grow, but it will likely lose money from fraud and risk. If Sales thinks like Credit, then your organization will never grow, because the only client that brings zero risk is the one you decline.
I first experienced this tension as a client when the factor I used oscillated on what they would and would not approve for purchase. Sales and Client Service would advocate for me to the Credit team and the back and forth was like watching a ball in a pinball machine bounce along wondering where it would come out. I understood that the back and forth was influenced by many forces, both internal and external to the factor, but it was hard to manage my business when it took so much time to work through the tug-o-war. I experienced the tug-o-war from a different perspective when I founded NowAccount and began purchasing invoices to accelerate payments to small businesses. As the CEO, I spent a great deal of time trying to calibrate the tension on the proverbial rope between our Chief Growth Officer and our Chief Credit Officer, a nice way of saying that I was the constant mediator.
I have long been a contrarian and a serial entrepreneur, which is what led me to create NowAccount after experiencing the challenge of using traditional loans and factoring. After processing billions of dollars of transactions, I was intrigued to think about how one might use underwriting as a sales/growth tool rather than as a gatekeeper yet still maintain the integrity of risk management. I set out to do just that and I discovered that if you change the way you think about the tug-o-war, you add a new element of team incentives and you incorporate evolving AI, data analytics and automation in your workflows, underwriting can become the greatest growth tool in your quiver.
1. Change the Game: In a typical game of Tug-o-War, the team on each side is trying to pull the opposing team across a line or into a mud pit. The line is static. But business is not static. If the line moved each day, instead of a fixed line, depending on the goals of the company and its progress towards those goals, then the pull between Sales and Credit could still exist to maintain standards but the whole rope could move in the direction of the larger goal. Many companies employ standard underwriting criteria, which is like the fixed line. Traditional automated KYC and underwriting platforms streamline the process of gathering data and evaluating it against your standard criteria so you can speed up the time from prospect to client. It is a one-way flow. New players are leveraging AI, advanced data analytics and deep credit expertise to not only streamline KYC and underwriting but to then provide ongoing monitoring so you can make better real-time decisions with every invoice purchase. You can adjust your aperture for risk as frequently as you like to maintain a healthy portfolio and optimize growth, thereby moving the line in real time and doing so in a way that both Sales and Underwriting have full clarity and transparency. An added benefit is that you can more efficiently and effectively train new underwriters and ensure consistency in decisioning across underwriters and across the portfolio. When I started NowAccount we had underwriting thresholds that were relatively static, with some periodic adjustment after months of analysis, discussion and approval. Our CIO pointed out that the thresholds could be dynamic to peg the portfolio average versus a static floor that restricted our growth. Automated KYC/Underwriting/Risk management platforms are evolving to enable you to adjust your thresholds for approval in real time while ensuring consistency across underwriters and across the portfolio. With API’s directly into data sources combined with AI and Data analytics you can make real-time decisions and monitor every client in your portfolio as if you are underwriting them regularly.
2. Make Time your Ally: When I started NowAccount, the time it took to gather KYC documents, verify clients and debtors, underwrite the parties and decision them took days, weeks and even months if documents were not emailed in a timely fashion and in a complete and accurate format from the client or the broker. During that time a company’s health and the market could shift and Sales became increasingly frustrated with the back and forth as they tried to keep the prospective client interested. Today you can gather KYC documents, verify entities and individuals, do background checks, underwrite applicants and file UCC’s with the click of a button. There is no greater gift to Sales than to enable Credit to make a fast approve/deny decision so Sales can spend their time on accelerating the best prospects forward.
3. You get what you Incentivize: Most companies incentivize sales with commissions, driving them to fill the pipeline with as many prospects as they can and close as many new clients as possible, regardless of potential risk to the credit profile and future behavior. Some companies incentivize credit and risk with bonuses based on maintaining low portfolio losses. Sales feels little pain if there is a loss down the road (other than revenue-sharing-based commissions may cease for that client). Credit has no upside to approving a new client, only downside if the client does not perform. I have had success including an element of cross-functional, team-based incentive compensation such as adding a component to Sales’ incentives tied to minimal losses and adding a component to Credit’s incentives tied to growth. Both Sales and Credit get that portion of incentive compensation if the company grows AND losses stay below a target. Every organization is structured differently but you can find the points of tug-o-war and add an element of incentive that is only achieved when the company meets its goals, and the tension is optimized.
4. Creative Collaboration – Typically Sales spends a great deal of time getting to know the clients back story, culture, behavior and business, but they may never see the transaction data because they move on to the next sale. Credit sees the transaction data and forms an opinion of the client, with no context. Include Credit in client meetings from time to time so they can develop a gut for client behavior and trust with the client. Include Sales in credit review meetings from time to time so they can develop an appreciation for leading indicators to loss. I once brought together my entire company for a large game of “Left Right Center”. If you have not played this game, everyone starts with three $1 bills. Each person rolls dice (one for each dollar) in turn that dictates whether they give a dollar to the person on their left, on their right, keep it or put it in the center “Pot”. The last person with a dollar in their hand gets the pot. Playing the game, each person learns quickly that every time a dollar is lost to the pot it is out of circulation, and they have one less chance to finish with a dollar in their hand. As a factor, when we lose $1, we don’t just lose $1, we lose the right to use the $1 over and over – to turn the dollar X times a year. This new appreciation for the value of the $1 helped sales understand the gravity of losing $1 that could have bought 9-10 more invoices that year (and resulted in many more commissions). After playing the game, the Sales team was much more attuned to looking for risk.
5. Prequalification Tools – Sales professionals are expert fishermen. Some deploy a net fishing strategy and cast their nets far and wide knowing they will bring in a big catch but many of the fish will be declined by credit. Others are expert fly-fishermen, bringing in fewer fish with precision. Net fishing builds an impressive and bulging pipeline but is incredibly inefficient and typically results in a high client acquisition cost due to the low conversion rate and the high cost of underwriting. If you utilize an automated system, you can significantly reduce the client acquisition cost by minimizing the amount of time spent by Credit underwriting prospects that don’t make it through the initial KYC screening, the background checks or the initial credit evaluation. To utilize a fly-fishing strategy, Sales needs to be well-educated in the attributes that make an ideal client. Engage Credit to develop prequalification criteria that Sales can use to prospect. The criteria need to shift in real time to align with the credit aperture opening or tightening, and automated platforms can keep everyone aligned. Incentivize both Sales and Credit on the success of the prequalification tools so they work together to refine them.
Underwriting has always been seen as the gatekeeper in most organizations, and gatekeepers are important to focus resources and to protect the portfolio. Sales teams exhaust every effort to find and attract clients that Credit will accept and let in the gate. This tension is healthy, but often not optimized. Using creative collaboration, team-based incentives and advanced AI and data analytics combined with cutting edge automation you can speed up the process from prospect to approval/denial and you can monitor or effectively re-underwrite clients regularly to improve decisioning and turn Credit into the greatest growth tool you have.
Bio:
Lara O’Conner Hodgson
CEO, RoxWrite, Entrepreneur in Residence, Rule 1 Ventures
Co-Founder, Now Corp
Co-Author, “Level Up: Rise Above the Hidden Forces Holding your Business Back” (Portfolio Penguin, 2022)
Entrepreneur in Residence, The Harvard Business School (2017-2021)
Lead Coach, Create-10X Cohort of Create-X, Georgia Tech 2025
Lara joined Rule 1 Ventures in 2025 and serves as CEO of RoxWrite, a company that enables banks, lenders, factors and any business extending credit to customers, to quickly and accurately underwrite and assess the risk of the borrower or customer using real time access to the world’s best data and AI intelligence to decision and monitor customers. Lara experienced the challenge of consistently underwriting clients and accurately monitoring clients over time while running Now Corp.
Lara co-founded Now Corp, a company she created to free small businesses from the burden of being a free bank to their customers. She served as President & CEO from 2010 – 2024. Now® has accelerated over $1B in payments to small businesses and changed the way businesses get paid in partnership with Goldman Sachs, Brigade Capital Management, The Coca-Cola Company, the US Dept of Treasury and others. To scale Now® Lara co-developed the first ever asset-backed securitization packaged as a municipal bond. Lara co-founded Nourish Inc, and introduced its first patented products for children, in airports, hotels, entertainment venues and retail outlets across the US. Lara experienced the challenge of having to fund the trade credit required to support growth. Not finding a solution that worked, she launched Now® Corp and created NowAccount®, the first payment system that enables B2B businesses to get paid immediately in a way that feels like taking a credit card for payment (not a loan or factoring) even when terms are offered. Now Corp is the subject of a Harvard Business School case study that has been taught in HBS’ Entrepreneurial Finance course since 2013. Lara served as an Entrepreneur in Residence at the Harvard Business School from 2017-2021 and continues to serve as a New Venture Competition Judge, as a member of the MS/MBA Advisory Board and as a mentor for the Field X class.
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