Do you give a customer deferment of payment? Then, on the basis of a credit report, you should do a credit check to find out whether or not it will repay you within the agreed period. A credit report provides you with all the information you need.
An extensive credit report contains a lot of data and financial analyzes. All information and each category (history, management, payment behavior, financial position, activity, ...) has its value to map the overall picture of a company, an association or a self-employed person.
Monitoring of Existing Customers
Once you have accepted your new customer, it starts. After all, from that moment on your 'real' risk starts. You are going to deliver goods, provide money, rent out objects, in short, do business that only needs to be determined if your customer ultimately pays for it.
In order to ensure that the risk inventory that you have made during acceptance is not in vain, it is important that you keep credit information about your customer up-to-date. Monitoring and receiving Alerts help to identify early risks. (Needless to say, the point here is that only timely and high-quality data will lead to the correct Alerts.)
Credit information agencies have developed valuable predictive indicators that help you to get and maintain a good picture. By proactively sharing these risk data with your (sales) team, you not only increase risk awareness in the organization but also help you spot commercial opportunities. After all, a positive change in the risk profile of your customer can lead to new business successes.
So involve the sales team in the credit check and periodically share the credit information with them. You will see that people start looking more critically at new prospects and get a better understanding of the risks and the potential consequences for your organization.
To Support/Supplement to a Credit Insurance
I would like to talk about the use of credit reports in a situation where there is credit insurance.
Depending on the type of policy and the coverage it offers, there may be a 'self-assessment limit.' This is a credit limit that you may assign to your customer without having your insurance company test it in advance. Insurers set bandwidth in the policy within which this limit must fall, and require a credit report that 'justifies this limit.'
Now I hear many credit managers say that they choose the cheapest provider ... "the risk is still insured." But they are wrong.
First of all, in almost all cases you have a deductible, and the insurer will only reimburse part of the damage. (usually 80% to 90%) The remaining amount is still on your own account. Depending on the nature of the relationship, this can still be done in paperwork.
In addition, with insurance with a self-assessment limit, it is interesting to use a high-quality credit report. Because the scoring models are much more accurate in this, you can profit maximally from the credit space that they display. You will then receive a limit in more cases leading to more commercial space to do business.
Providers who work with inferior data and scoring models will not be able to provide a large part of the market with a limit because they do not have enough in-depth data for this or because their scoring models are not advanced enough to arrive at good assessments. This ultimately costs trade and therefore money!
Please, log on to ReportingAccounts.com and read more about the credit checks for companies and directors!