Credit information saves time and money: you will know who you are dealing with. Good credit information reduces the risk of non-payment. Check whether your existing and new potential customers are creditworthy before doing business with them. Prevention is easier than cure.
In business terms, credit is the capital provided to a business that must be repaid within a certain period of time. Therefore, you are supplying on credit if you supply goods or services to a business with a payment condition (payment within an X number of days).
Checking the credit rating of potential buyers is a way of preventing non-payment. You want to minimize your debtor risks. Whether it is an existing or a new client, you want to know; is my potential buyer creditworthy? Is the company financially sound? What is the customer’s payment behavior like?
Non-payment not only has a direct impact on cash flow and liquidity, but it can also cause your company to run into trouble. Of course, you want to avoid that at all times; therefore, keeping your debtor risks as low as possible is necessary.
Credit information is any information related to the creditworthiness of a company. Based on this information, you can estimate whether you consider it likely that your potential buyer will pay. You can gather information yourself, and you can also request a credit report through specialized agencies.
Read more about reducing the risk of non-payment with a credit information report and the difference 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 the subjective information of insurers. Here the added value of the credit insurers is clearly visible. They are in direct contact with the companies and process this information in a credit report.
You can read what credit information meant for a well-known A-brand multinational in the retail & fashion industry here.
The importance and thoroughness of the ‘Know Your Customer’ principle is fully explained here.
We have our in-house credit analyst to provide you with substantiated advice.
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