Credit Risk
3 mins read

How wholesale businesses can manage credit risk

Wholesale business warehouse

In the ups and downs of today’s global economy, wholesalers often bear the brunt of it all when it comes to another supply chain collapse.

So, what can you do to make sure your wholesale business steers clear of toppling supply chains and keep your ledger strong?

Wholesalers and increased credit risk exposure

With ongoing global economic upheaval, the unprecedented changes in supply and demand have seriously impacted wholesalers and how they run their businesses. While companies higher along the supply chain have the option of mitigating costs through commodity and transport negotiations, wholesalers and their trading partners are caught in the middle, often without any means to predict or protect the livelihood of their businesses as tensions in supply chains increase.

In a future where the wholesale industry faces a lot of uncertainty, your wholesale business’s exposure to credit risk also increases, as your potential trading partners experience a higher chance of becoming insolvent or defaulting with every supply chain disruption and collapse.

If one, or a number, of your critical suppliers end up failing to meet their end of the contract because they’re held up by their own contractors, this can have huge financial, operational and reputational impacts on your own business if you don’t address them soon enough.

By having the right tools in place to measure your credit risk during the customer onboarding and supplier procurement processes and on an ongoing basis, your business is sure to keep ahead of the competition and remain resilient even in the most vital of supply chain collapses.

Predicting and mitigating credit risk

To ensure your business reduces its proximity to supply chain collapse, it’s first and foremost important to set the right credit policies, credit limits and payment terms so that you can identify those potentially high-risk customers sooner rather than later.

Through utilising technology such as CreditorWatch’s unique all-in-one credit reports to access leading industry insights and gain comprehensive data on the financial health of all your future trading partners, you can likewise make more accurate, data-driven decisions to protect your business from crippling credit risk.

For a deeper analysis of how much risk a potential customer poses to your business overall, scored insights like RiskScore, which calculates credit scores, and Payment Rating, which keeps track of payment habits, will help your business collate and crunch this data faster and more efficiently.

These tools incorporate historical and predictive data with advanced machine learning to accurately predict not just credit risk, but also payment risk, default risk and insolvency risk – covering all bases. Combining these scored insights with our Financial Risk Assessment will, in turn, secure all your major credit and procurement decisions by giving you access to expert analysis of the financial performance and risk of all your potential trading partners.

However, sometimes, it’s not always possible to identify your high-risk customers and trading partners outright. To prepare for any future supply chain disruptions and reduce your own risk of collapse, ensure your goods and credit are protected by registering with the Personal Properties Securities Register (PPSR).

As a secured creditor under the PPSR, you can reclaim your goods and collect any outstanding debts from insolvent or bankrupt customers and trading partners faster and more easily. You can likewise speed up processes even faster by employing PPSR logic, the fastest PPS registration tool on the market, which simplifies the way you create, manage and renew PPS registrations, saving your business time, energy and money.

For overall risk protection, also implement ongoing monitoring to be updated on the latest adverse changes within your current customers and trading partners. By using 24/7 monitoring and real-time alerts, you’ll be able to spot early warning signs of financially struggling customers and trading partners and account for these risks accordingly through vital due diligence.

For a more efficient and comprehensive way to predict and minimise your wholesale business’s credit risk and get ahead of your competitors, contact CreditorWatch today!

creditrisk wholesalers
Victorian PPSR Sales Specialist
Jason Sutherlin has been with CreditorWatch for over 6 years and currently holds the position of Victorian PPSR Sales Specialist.
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