Credit Management
4 mins read

The importance of credit monitoring for wholesalers and retailers

It’s no secret that the cash flow stability of wholesale trade and retail businesses can change very quickly, especially given ongoing global supply chain delays. It only takes one adverse event, to one trading partner, to create a domino effect that ripples through every associated business. Luckily, there are credit monitoring tools at your disposal that, when property utilised, may offer wholesalers and retailers 24/7 security and protection from high-risk trading partners.

Why do wholesalers and retailers need credit monitoring?

Ongoing global supply chain issues, that emerged during the pandemic lockdowns of 2020, have created heightened credit risks for wholesalers and retailers. Within this environment, the risk of bad debt and insolvency rises, especially when you’re reliant on other businesses for the flow of core supplies integral to your products.

These supply chain risks currently encompass extensive delays in the delivery of goods, which is impacting customer sentiment. The supply of materials is also becoming more difficult and expensive to procure. The impacts of supply chain delays are further exacerbated when you factor in rising inflation levels putting downward pressure on bottom lines. Entities along the supply chain are lifting their prices correspondingly, so the cost of purchasing and delivering goods to and from wholesalers and retailers is increased.

These risk factors alone expose businesses along the supply chain to cash flow issues, and are magnified in instances of late or non-payment, or the insolvencies of trading partners. Put simply, if one party within the supply chain faces credit risk, this can quickly snowball into substantial issues for all involved. 

So, how can wholesalers and retailers better protect themselves from risk exposure when utilising domestic or global supply chains, especially when trading partners may not be transparent about internal issues? You shouldn’t have to rely on a crystal ball to predict the stability or reliability of your trading partners. This is where automated credit monitoring systems can offer a lifeline for wholesale and retail businesses – it helps to strengthen credit risk management by tracking the payment behaviour and credit risk of your trading partners.

Automated credit monitoring solutions to protect cash flow

When supply chain issues are adversely impacting businesses on such a monumental scale, you can never be too careful about mitigating credit risk, even with your top trading partners. The strongest of business relationships can be tested by external factors, and if your most-trusted partners are experiencing financial issues that you’re not aware of, your business can be left financially vulnerable.

By adding credit monitoring to your debtor management strategy your business stays vigilant, and you may avoid cash flow issues caused by struggling trading partners as soon as, or even before, they occur.

CreditorWatch’s credit monitoring service is designed to empower wholesalers and retailers to be more aware of everything that’s happening, with every associated entity in their supply chain, 24/7. This advanced system is constantly reviewing your customers and suppliers, sending you automated email alerts as crucial information changes. You’ll be notified immediately of any high-risk indicators about your trading partners, including:

  • Court actions
  • Non-payments to other suppliers
  • Insolvency notices
  • Administration appointments
  • Cross directorships
  • Multiple credit enquiries

You’ll also be updated about changes to these sophisticated company rating systems, exclusively offered to CreditorWatch customers through our business credit reports:

  • Payment Rating changes Your trading partners are rated from A to E, according to their payment history and reliability, illustrating their likelihood of paying in a timely manner. If this rating were to fall, you’d be immediately notified.
  • Payment Predictor changes – Discover your trading partner’s payment history and habits over the past 12 months, compared to other businesses in the wholesale and retail industry. These habits include the average number of days taken to pay their bills. If a trading partner indicates that they may be a slow-paying debtor, you’ll be the first to know.
  • RiskScore changes – This indicates the creditworthiness of your trading partners and calculates their likelihood of default in the next 12 months. Companies are assigned a numerical credit score between 0-850, as determined by advanced technology and comprehensive data. The lower the score, the greater the risk that company poses to your cash flow. If this score were to change, your business would be immediately advised.

CreditorWatch’s credit monitoring service provides businesses access to over 50 public and private data sources, rendering it the most predictive, market-leading indicator of credit risk on offer. This includes the ability to perform company credit checks on unincorporated entities, such as sole traders and partnerships. After all, you never know what goes on behind closed doors.

Wholesalers and retailers using CreditorWatch’s credit monitoring service will have access to a comprehensive analysis of their trading partners’ financial health. Any credit risk issues are immediately flagged, so you can proactively mitigate risks with speed and accuracy, and avoid bad debt, giving your business a competitive advantage. For example, if you’re awaiting invoice payment from a trading partner, and you were notified that their RiskScore recently decreased, you could expedite the debt collection process, ensuring your cash flow stays smooth and even. 

By utilising CreditorWatch’s exclusive data through automated monitoring and alerts, your business can protect itself from exposure to credit risk and default caused by trading partners in your supply chain. Contact us today for a free demo and discover how 24/7 credit monitoring can help you protect and grow your wholesale or retail business.

Communications & Marketing Coordinator
Bridget joined CreditorWatch as Coordinator of Communications and Marketing in June 2021. She is passionate about developing and communicating content that assists businesses of all sizes to be supported and protected to grow.
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