Business Insights Financial Risk Assessment Risk Management
4 mins read

Five benefits of Financial Risk Assessments

CreditorWatch’s Financial Risk Assessments provide a comprehensive look into the financial viability of your trading partners, helping you make the right decisions to protect and grow your business.

What can your business gain from CreditorWatch’s Financial Risk Assessments? Check out these five benefits:

1. Financial risk management for businesses of all sizes across all industries

Financial Risk Assessments are a versatile and effective financial risk management tool used by businesses across all industries, for various purposes. They help businesses make high value financial decisions and mitigate risks upfront. They also help with ongoing due diligence, to assess potential trading partners and conduct annual reviews on existing ones.

Financial Risk Assessments are used to mitigate mid-to-high level risks – to assess strategic trading partners; the suitability of new or high value contracts; and the approval of new or large credit limit offers. They are also used by business of all sizes – helping small to medium businesses get a clearer understanding about exactly who they’re dealing with, and helping larger companies learn more about their top 20 to 30 per cent of clients.

Financial Risk Assessments are especially useful when dealing with critical contracts, sizable tenders, large credit limits and high value agreements. They reveal if an entity can pay you on time and honour its contracts, helping to protect your business from potential issues like court actions, project delays, project renegotiation costs and bad debts.

2. Complement your credit reports with valuable financial insights

Delve deeper into an entity by going beyond their credit report. A credit report uses data from over 50 public and private sources to present the credit history and risk profile of an entity.

CreditorWatch’s credit reports contain:

Obtain a stronger understanding of an entity by pairing your credit report with a Financial Risk Assessment, which uses valuable data from company financials, including cash flow, income statements and balance sheets, over a two-to-three year period.

CreditorWatch’s Financial Risk Assessments contain:

  • Organisation summary
  • Financial risk rating
  • Probability of default
  • Financial performance summary
  • Key financial performance indicators
  • Financial trend graphs
  • Key ratios
  • Suitability assessment (of credit limit or contract value)
  • Professional opinion by a CA or CPA

In a Financial Risk Assessment, an experienced analyst offers a detailed analysis of the entity’s financial performance in relation to the current economic and industry outlook. This includes a custom interpretation of their financial strengths and weaknesses, expert forecasting, and recommendations on how you can protect your business with a specific risk management process.

Use both credit reports and Financial Risk Assessments to gain a comprehensive look into the financial viability of your trading partners and start making more confident decisions for your business.

3. Assess suppliers and contractors and make better procurement decisions

When making procurement decisions, it is essential to understand the risks associated with potential suppliers and contractors. Are they going to be an asset or liability to your business? What happens if a service provider goes bust halfway?

If your supplier is unable to finish their contract, there will be significant financial and reputational repercussions for your business. If you fail to deliver your products and services to your customers, they could lose trust in your business, which could affect client acquisition and retention, and therefore impact your bottom line. Your business may be perceived as being unreliable and this may hinder growth opportunities.

Financial Risk Assessments help procurement managers choose the right service provider by checking the financial viability of entities tendering for a contract, revealing potential risks and predicting future performance. These reports enable businesses to implement risk management strategies upfront to avoid supply disruptions, project delays and failures. 

4. Assess customers and debtors and make better trade credit decisions

When granting credit, there is always the risk that your debtor will not be able to pay you back. Late payments or payment defaults can be fatal to your business, especially if these happen with large deals or multiple key customers.

It is therefore important to strengthen due diligence when assessing key customers, credit limit increases and major deals. CreditorWatch offers a Financial Risk Assessment with Credit Evaluation – this report considers the value of the transaction and assesses the suitability of the proposed credit limit and terms, in relation to the entity’s financial performance. This is followed by a professional analysis, contextualising the situation according to the current state of the industry and economy. These reports and expert opinions help credit managers and CFOs make more accurate credit decisions to protect their business from bad debt.

5. Save time and resources with succinct and effective reports

It is confusing and time-consuming to go through thousands of pages of company data and review years of financial statements, to try to make out how a company is performing.

A Financial Risk Assessment summarises all a company’s financial information in a single page. It presents its financial performance in a succinct manner, using simple explanations, graphs, ratios and tables. Its uniform format also makes it easy to compare entities.

CreditorWatch offers 14 types of Financial Risk Assessments, seven each for credit and procurement, to meet varied needs and different levels of risk. Our tailored solutions ensure that our customers receive the exact information they need.

Our Financial Risk Assessments can be produced in two days, at a competitive market rate. Save time and increase efficiency by outsourcing this complex task.


Get a Financial Risk Assessment to protect and grow your business

CreditorWatch helps you assess the financial stability of your trading partners, empowering you to make informed decisions to protect and grow your business.

Interested in ordering a Financial Risk Assessment? Get in touch with one of our experts now.

Ben Caroll
Key Account Consultant
Ben joined CreditorWatch since 2019, and is now focused, as a Key Account Consultant, on assisting the largest businesses in Australia to reduce their customer and supply chain risk.
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