The management of risk should be a key performance indicator for
any business – a poor decision or mistake in this area could
prove very expensive. So up-to-date business information has
a vital role to play in minimizing risk and supporting more
accurate business decisions.
In a trade credit environment where supplies are made to
customers on short-term credit of up to 90 days, the supplier
company should always view a credit report on the target company to
assess the potential risks. This could range from verifying the
legal name and address of the company for invoicing, to providing
an expert third party credit limit on the financial strength of the
company.
As an example, supplying £50,000 of goods on normal
payment terms to a customer is the same as supplying unsecured
goods for up to 3 months. If the customer was to default on payment
in this period through insolvency, then a bad debt of £50k
will be incurred automatically.
