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Your business might be COVID-safe, but is it credit safe?

As vaccination numbers grow and lockdown restrictions are gradually reduced, businesses are emerging from hibernation to a society that is eager to return to a ‘new normal’.

Just as our communities are vigilant about the continuing threat of the pandemic and are obtaining their COVID vaccine passports, it is prudent for businesses to remain watchful of the ongoing impacts of the pandemic and prepare a risk management strategy.

The businesses that have been heavily impacted by lockdown restrictions and are still feeling the repercussions need to be cautious and conscious of their own credit scores as demand and supply of goods and products have been largely impacted.

Being credit-safe and managing risk is important for the health and stability of a business, particularly as it confronts an uncertain trading environment. The credit-checking tools at CreditorWatch such as RiskScore and Payment Ratings allow businesses to efficiently manage their exposure to credit risk and implement accurate risk management plans.

The CreditWatch RiskScore is the most predictive company credit score and rating system in the market. The tool is made up of multiple subsets of unique data, helping you to assess your business’s creditworthiness and predict its likelihood of default over the next 12 months. The RiskScore allows you to make more informed decisions about who you do business with and implement a successful credit risk management plan, mitigating financial risk.

The RiskScore incorporates demographic risk assessment data capturing the economic stress of a business. This is a significant measure, especially for those areas that were placed under harsher COVID restrictions which placed greater pressure on the stability of businesses in those areas and negatively impacted their profitability.

This predictive measure of a business’s creditworthiness for the coming 12 months allows you to take pre-emptive steps about whether or not to continue to trade with a particular business.

The Payment Rating tool is designed to complement RiskScore and inform you of slow-paying businesses. The tool scans business-to-business transactions to measure the real time it takes companies to pay their suppliers’ invoices. This gives CreditorWatch customers valuable insight into their customers’ propensity to pay on time, or at all, and implement measures to protect their cash flow and business credit.

Specifically, it helps businesses make more informed payment decisions, like limiting credit amounts or asking for cash on demand. For creditors and financial services providers, it can be used as an early warning and risk monitoring indicator in credit scoring, assisting in making informed decisions about a customer’s credit rating and potentially prompting a full credit report assessment.

Ultimately, credit checks assist businesses in monitoring and mitigating their credit risk exposure, allowing them to gain a greater understanding of credit decisions and control over who they do business with. In the current business environment, it is important for businesses to be both COVID safe as well as credit safe.