Enterprises within the hiring and rental business historically operate on a critical foundation of trust. Understandably so, as the value and volume of goods loaned are often significant. The lease holder’s integrity is fundamental to the safe return of goods and the payment for any services rendered. If their payment history is suspect, or their creditworthiness deteriorates, you might neither recover the loaned capital nor be compensated appropriately for it.
Reducing risk in the hire and rental sector
Over the years, the business-to-business rental sector has over-relied on the value of a handshake or pre-existing relationship. It’s a classic example of the ‘hot-hand fallacy’ – tenured operators think that a healthy trading relationship in the past is an indication of continued success in the future.
This is shaky ground for your cash flow sustainability. The difficulty is that even businesses boasting decades of profitability can fall quickly into insolvency. Sometimes this is by virtue of factors entirely outside their control, such as the ripple effects of cash rate hikes. Their assurances alone cannot and must not be enough to satisfy your concerns.
Some business owners contend that if the terms and conditions of your hiring agreement are robust enough, you’ll surely be protected. Sadly, this isn’t the case. Even the densest of terms and conditions are usually not enough to fully mitigate against cash-strapped, late-paying trading partners. The settling of invoices can be dragged out weeks and months, starving you of the vital cash flow needed to pay outgoings.
Reducing risk in hiring and rental requires extra layers of due diligence and forewarning. Access to early indicators of late payment or default could ultimately decide the fate of the business. If this is left to chance, there’s no guarantee that the stipulations of your contract will trigger in time to make a meaningful difference. The renter may simply not have the cash left in the bank.
Automated debtor monitoring for hire companies
The automated monitoring tools developed by CreditorWatch take the guesswork out of identifying risky renters and leaseholders. The system flags all manner of adverse events: from deregistrations and liquidations to business name changes, cross-directorships, and payment defaults. Gone are the days of relying solely upon the word of a partner business to ensure their ability to pay invoices on time. The features provided remove the day-to-day hassle of manually reviewing the payment tendencies and credit risk profile of customers, and include:
Around-the-clock operation. Locked in 24/7, our machine-learning system is constantly tracking and checking trading partners to flag any adverse change immediately as it’s discovered. It doesn’t take time off, and it doesn’t require a minute of sleep. You need risk monitoring that’s comprehensive and uniform; that doesn’t leave gaps or miss key details. No matter when the risk profile increases, or by how much, our intuitive monitoring system will be on-hand to capture the information, allowing precious time to prioritise the collection of outstanding funds.
Automated alerts. Not only is the system always in action, but it also knows how to most conveniently reach you in real time. The access to monitoring capabilities that recognise deteriorating risk is only one-half of the equation. Equally important is to be made aware of any event as early as possible in order to act decisively to reduce your exposure. The sooner you know, the quicker you act, and the more likely you’ll have a positive outcome, in either collecting payment or recovering the asset. Our debtor monitoring tools contact you immediately over digital channels as a change is flagged. It leaves nothing to chance, ensuring as much time as possible for your business to respond most appropriately.
Extensive public and private data. A true assessment of the credit risk and payment behaviour of partner businesses requires access to an extraordinary cross-section of data. Thankfully, as the most used credit reporting bureau in Australia, CreditorWatch has the numbers to back up our assertions. As our monitoring tools alert you to changing credit risk, you can feel assured knowing that it is backed by an exclusive base of over 50 public and private data sources. This includes the Australian Securities Investment Commission (ASIC), Australian Business Registry (ABR), and Australian Financial Security Authority (AFSA). Leveraging the best data gives the best insights, and the use of our debtor monitoring tools allows your business this access.
In an industry as reliant upon the health and business viability of trading partners as rental and leasing, any additional peace of mind can make all of the difference. If you know that you have a sophisticated 24/7 monitoring and alerts system working on your behalf, with the functionality to alert you instantly to any changes, it will be that much easier to rest comfortably.
Contact us for a free demo and see how DebtorLogic can help you reduce risk and stay focussed on growing your business.
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