Credit Risk DebtorLogic
4 mins read

Managing accounts receivable risk in the retail and wholesale sector with DebtorLogic

Overdue invoices can cause a serious headache for retail and wholesale businesses, especially considering the reliance on steady cash flow to buy more stock and supply your goods. Not only is the impact detrimental to your accounts receivable, but also the time spent chasing up late payments eats into operational hours. Your business cannot rely on good faith alone when it comes to invoice payment: it’s time to utilise debtor risk management tools. 

CreditorWatch’s debtor management platform, DebtorLogic, allows you to avoid high-risk customers. It also provides you with comprehensive data and real-time analysis to anticipate deteriorating customer payment behaviour. Through DebtorLogic, your retail or wholesale business will be empowered to proactively tackle debtor management, maintain consistent cash flow and, most importantly, ditch late paying customers for good. 

Late paying customers: why retailers and wholesalers must manage the risk 

A late payment here or there may feel like a low-risk factor to consider for your business, but when overdue invoices become a recognisable customer pattern for your accounts receivable, it can quickly snowball into credit risk. If they are left unmanaged, accounts receivable risks are likely to stifle your business’s growth and success. 

On a larger scale, late payments and poor cash flow can also result in the inability of your business to meet its operational expenses. You may find yourself looking for financial support in the form of taking on additional debt. If late payments continued, this would put the business at greater risk of being unable to meet repayments on these new liabilities, hurting the company’s credit score. For businesses in the retail and wholesale sector specifically, you rely on even cash flow for the consistent turnaround of goods. Non-payment from clients will hinder this essential revenue, which has the effect of slowing down your purchasing cycles, severely impacting stock availability, and therefore your ability to profit from the sale of these goods.   

In turn, your business is now at risk of being unable to pay its own suppliers on time. This can severely impact partner relationships, potentially resulting in your business losing future opportunities with suppliers. Accounts receivable risks can therefore prevent retail and wholesale businesses from growing, as well as reduce customer satisfaction, while hurting supplier relationships.  

Beyond that, there is the time-cost involved in the frustrating task of chasing up late payments. Your time, and your employees time, is precious, and operational hours should not be wasted chasing down debtors. Especially when the utilisation of debtor risk management tools could be doing the hard work for you. 

For these crucial reasons, businesses in the retail and wholesale sector must make the management of their accounts receivable risk a high priority. 

How to manage accounts receivable risk 

The good news is that you don’t have to go it alone. An experienced debtor risk management tool provider, like CreditorWatch, will walk side-by-side with your business to help you avoid late paying customers for good. Through the implementation of CreditorWatch’s interactive trade platform, DebtorLogic, you can proactively manage and reduce any accounts receivable risks to your retail or wholesale business. 

Rank your riskiest customersWith a comprehensive analysis of your aged-trial balance, DebtorLogic assesses your client’s payment trends, to calculate the likelihood they will pay your invoices on time. Essentially, CreditorWatch allows you to identify your best and worst customers to see where the late payment issues lie. This is facilitated through CreditorWatch’s Payment Rating system, which rates your customers from A to E, according to their payment history over the past 12 months. It does so by scanning B2B transactions to measure the time your customers take to pay suppliers, shining a light on their payment reliability based on past behaviour. 

See the bigger pictureNot only can DebtorLogic assist in tracking client payment behaviours, but you’ll also discover how the client compares to other entities in the industry. This is top-level information that can allow your SME to make a data-driven decision around engaging with prospective clients, or parting ways with high-risk entities. 

Ensure faster payments and better collections You can then use DebtorLogic to single out these high-risk debtors and take proactive steps to prioritise collections. Our debt collection tools, provided through DebtorLogic, assist your retail or wholesale business by streamlining the debt recovery process, so you may get paid faster. Our branded templates, including payment terms, payment overdue notices and letter of demand, all include the CreditorWatch logo, which has been proven to increase the chance of receiving payment by 53 per cent. Plus, you’ll be able to eliminate the time-consuming admin spent chasing overdue invoices.   

24/7 monitoring and alerts – You will also get real-time alerts when your customer’s payment behaviour starts to deteriorate, so you can stay on top of their cash flow problems and react quickly to minimise the risk. Through 24/7 customer payment monitoring, your business may spot the early warning signs of credit risk and leverage this information to speed up collections or avoid working with riskier clients.   

If you’re interested in taking a proactive approach to managing your accounts receivable, please don’t hesitate to contact us today for a free demo, and see how DebtorLogic can help you reduce risk in your business. 

accountsreceivable retail wholesale
Trade Consultant
Lucinda joined CreditorWatch in 2019 and is a Trade Consultant. She specialises in CreditorWatch’s ATB-analysis trade program, DebtorLogic. Lucinda helps small to large businesses streamline their credit management and collections processes to proactively mitigate their debtor risk. She’s passionate about offering CreditorWatch’s data insights to strengthen her clients’ existing practices and to reduce the risk caused by late payment behaviour.
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