Credit Services: An overview
Do you know who you’re trading with? If you have any doubt when answering that question, you should consider making some tweaks to the way you assess and manage new and existing customers. Over the past 18 months, increasing numbers of businesses have turned to NCI for more information on their customers, in some cases our processes have identified error rates in customer identification of as much as 30 per cent.
NCI’s Credit Services Department encompasses everything credit related, from PPSR and company reports to dollar value recommendations and comprehensive international reports.
How can Credit Services be used?
Any business that is extending credit to other businesses should consider using a third party to assist risk assessments on the account. There is no doubt that sometimes credit reports can be long and difficult to interpret, so it’s important to use a provider that has specialised phone support. You need to be able to discuss the report in detail before making a decision that could negatively impact your business.
How to minimise the risk of a bad debt?
There are many things a business can do to reduce the risks of trading on credit terms. We think the below points are a good start:
•Know who you are trading with and confirm you are dealing with the correct entity
•Have up-to-date terms and conditions in your credit application which protect your business
•Have robust assessment processes to evaluate potential customers and do not deviate from it
•Set specific credit limits and make sure they are justified
What to consider when assessing risk?
When you are assessing a business and the risk it presents, you should consider many things, but importantly:
•How long have they been trading and what is their history?
•Who are their clients?
•Do they have thorough credit management processes?
•Do they have trade credit insurance?
•Are they profitable?
Summary
The sky is the limit when it comes to how much investigation is enough to justify extending credit to another business. It’s important to consider the potential impact a bad debt could have; we can all do a “tick and flick” exercise but really, do you want a quick decision, or the right decision? This can mean the difference between success and failure.
NCI is an Associate Member of the Drinks Association.
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