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Trade Credit Risk

What is trade credit risk?

Trade credit risk is the risk a business assumes when they extend credit to a debtor. Every business relies on cash flow but that is particularly true of small and medium sized businesses in Australia.

Your cash flow helps you to manage your own debt, cover your payroll obligations and provide the movement and flexibility a business needs to capitalise on potential growth opportunities like seasonal sales spikes, branching out into new markets or revitalising your presence with creative marketing. Cash flow is an important indicator of your business health.

Ensure you get paid on time

One of the largest factors affecting cash flow for small and medium sized businesses is being unaware of trade credit risk posed by unpaid invoices. When your invoices aren’t paid on time, or aren’t paid at all, your accounts come under strain.

If you know that this is going to happen, there are measures which you can employ to cover the loss either permanently or over the short term. CreditorWatch works in conjunction with, or in place of, debtor insurance, to ensure you stay on top of your receivables.

CreditorWatch protects your business with ongoing monitoring of your trade credit risk. Our services are designed to help you manage your accounts receivables with a strong credit management practice that measures the potential for bad debt through ongoing credit monitoring of your existing customers as well as a thorough credit check before you begin trading.

Traditionally, credit risk management practices have only feasibly been available for large corporations with dedicated credit teams. With our help, however, you can now adopt some of the same trade credit risk measures that the big companies have always been using.

CreditorWatch offers a suite of account receivables services which can help you to measure the potential risk of a debtor you are thinking of trading with. Firstly, we can provide you with a thorough credit report you can incorporate into your risk management process before you begin trading with them. We are Australian owned and operated and can provide you with a credit analysis of any legal entity trading in Australia.

This credit file will reveal the credit risk status of the entity you nominate and include things like their risk of insolvency, protracted default status, whether they are under external administration and whether there are any court notices filed against them.

That’s the first step. What we can then offer you is the ongoing monitoring of that debtor. The world of business is not perfect after all however even struggling companies go on to pay their bills and trade out of trouble. When you know that a debtor represents a high trade credit risk, you can still trade with them by ensuring that your invoicing policy and receivables process reflect the risk accordingly.

We can also help you to file defaults against problem debtors or any other ‘next step’ processes that you need to get your debts settled and your business back on stable financial ground.

CreditorWatch is the financial services and credit bureau helping Australian businesses to develop strong and reliable trade credit risk practices. With over 50 000 clients already, we must be doing something right. To find out what it is, why not try our services for free? Click here find out more: