Reduce effects of the financial crisis
In case of either new or existing customers, credit placement and customers paying via bank transfer will always carry risks. The goal in case of every credit placement beyond the achievement of the biggest possible profit is to avoid risky, potentially non-paying or delaying customers. Due to the increase of risk in the business environment, now it is even more important to handle this issue on executive level, to ensure that our company is prepared, and has appropriate credit placing policy.
What losses can a company suffer if they do not pay appropriate attention to customer risks?
Most people understand customer risk as clients not paying at all. Today, in Hungary, an average company risks 3% of its profit when not handling its clients with the necessary diligence. According to experience, 80-90% of these risks can be identified with due care. The late payment by partners increases the exposure of a company. Due to the effects of the economic depression these risks keep growing, it is obvious now that the non-payment risks are increasing and will really peak next year.
Which factors affect the risk level of a company?
From the basic data, it is important to verify if the company really exists, whether it is under legal procedure, is there any other negative information regarding the company, how long has it been in operation, who are the owners, executives, what is the past of the company, the risk level of the sector it is operating in, how often certain company data are changing, what is the company’s financial status, in what direction is the company heading, how much delay does it have when paying its other suppliers. It is important to analyze the company compared to other players of the same business sector, and we can gain valuable information if we also take into consideration the present and past situation of those other enterprises that are linked to the company with various points of connection.
The gathering of all these information and its coherent analysis demands a lot of time, energy, money and expertise, while the primary task of every enterprise is to focus on the business. What is your recommendation?
The company evaluation business report contains all these data, furthermore it also defines a risk evaluation and the recommended maximum credit as well, and it is not more costly as if we would do it by ourselves, on the contrary, it makes the evaluation on the basis of much more data, comparing it to other companies. The D&B risk evaluation, for example forecasts the chances of a company going under insolvency procedure within one year, so we can take measures still on time. The D&B business report is constructed on the basis of more than 300 indicators, by taking into consideration the above-listed risk factors as well, so it has excellent forecasting potential, and continuously monitors the changes affecting the company. D&B provides company data from more than 200 countries, so we can efficiently support our partners in the prevention of foreign risks. Many new customers may appear at the companies related to the depression, who did not get credit anywhere else, and due to this fact, they try their chances with a new supplier, so we have to pay special attention to that in the future.
What can be done in case of new and existing business partners?
The use of business information is a remarkable instrument in case of new clients. In case of most companies they do not have time for the existing clients; however, 80% of uncollectible claims arise at these clients. The systematic follow-up of our customers can be easily solved today with certain types of customer monitoring solutions. One of the most popular solutions of the selection of D&B is the Portfolio Monitor, which continuously indicates to the clients the customers where they should be cautious, in certain cases to cease the open delivery, but it also calls the attention to those customers where new sales opportunities may open due to the decrease of risk. The close follow-up of the existing partners is becoming more important now in this quickly changing environment. It is very important to have a well constructed and strictly followed credit policy, which defines how to minimize the risks in different customer groups, with the help of which utilities and processes. We are ready to help to establish and construct this.
How can those, who are interested in the solutions of D&B get more information?
We are happy to welcome anyone interested on our risk management workshop.
Language of the workshop: Hungarian
Tudástár
