Credit information saves you time and money: you know who you are doing business with. Good credit information reduces the risk of non-payment. By performing a credit check on your potential customers, both existing and new, you significantly reduce your credit risks. Prevention is better than cure.
In business terms, credit is capital provided to a company that must be repaid within an agreed period. When you supply goods or services with a payment condition (payment within x number of days), you are supplying on credit. It is therefore important to know in advance how creditworthy your customer is.
Checking the creditworthiness of potential customers is essential to prevent non-payment. You want to minimise your debtor risks, so it is important to know whether your customer, existing or new, is creditworthy. Is the company financially sound? And what is its payment behaviour like?
Non-payment not only has a direct impact on cash flow and liquidity, it can even cause your business to run into trouble. Of course, you want to avoid that at all costs. So it is imperative to keep your debtor risks as low as possible.
Credit information includes all data that says something about a company's creditworthiness. Based on this, you can assess whether your customer is likely to pay. You can collect this information yourself or request a credit report from specialised agencies. Would you like to have a credit report drawn up?
Read here more on reducing the probability of non-payment with a credit information report and what the difference is between a credit limit from a credit insurer and a credit information report.
The first three points mentioned above concern objective information. The second three points mentioned above concern subjective information from insurers. This clearly characterises the added value of credit insurers. They are in direct contact with the companies themselves and process this information in a credit report.
You can read what credit information did for a well-known A-brand multinational in the retail & fashion industry here.
The importance and thoroughness of the 'Know Your Customer' principle is explained in detail here.
Creditworthiness indicates a company's ability to meet financial obligations on time. A creditworthy organisation is seen as reliable for suppliers, financiers or insurers. The assessment is based on annual figures, payment behaviour and industry trends, among other things.
Credit information is all information that provides insight into a company's creditworthiness. Based on this, you can assess whether a customer is likely to pay on time. You can collect this information yourself or request it from specialised agencies in the form of a credit report.
Credit risk is the risk that a customer fails to pay an invoice or pays it late. This can lead to liquidity problems or even losses. By requesting credit information or taking out credit insurance, you can reduce this risk.
By checking the creditworthiness of new and existing customers, you reduce the risk of non-payment. It helps you assess whether a company is financially sound, what its payment behaviour is like and whether there are any risks that could harm your cash flow and liquidity.