Patrick Coghlan, CEO, CreditorWatch
Times are tough for Australian businesses. They currently confront a variety of challenges, from rising interest rates and high inflation, to labour shortages, supply chain disruptions, high power costs and the list goes on.
All this in the wake of the pandemic means that profit margins are tighter than ever. It also means that many businesses you trade with are in a very different state of health to what they were three years ago.
Incorporating AI-driven, data tools into your credit risk management process is a simple and cost-effective way to reduce your exposure to credit risk and bad debt. Using automated tools also frees you up to spend more time on growing your business.
The three key components of a digital credit management process are credit reports, monitoring and alerts tools and debt collection tools.
Credit reports
Before you engage with any new clients, trading partners or suppliers, it’s crucial that you understand the level of credit risk that company poses to your business. A CreditorWatch business credit report offers you the gold standard in performing due diligence on new and existing customers.
Our easy-to-follow reports illustrate the default risk of entities, categorised from A1 to F, as well as the likelihood of default over the next 12 months. The CreditorWatch rating system typically detects businesses under stress months before they go into external administration. Our risk data draws from more than 50 public and private data sources to highlight adverse events, such as:
- More than 11 million trade lines from Xero and MYOB integrations
- Defaults registered against the company
- ATO tax debt defaults
- Court actions
- Adverse cross directorship information
- ASIC notices published against the business
Monitoring and alerts tools
Consistently monitoring your customers for increasing credit risk and adverse events is critical to protecting the cash flow of your business. CreditorWatch’s 24/7 Monitoring and Alerts tool eliminates the prospect of any adverse changes slipping through the cracks. You can rest assured that as soon as critical information is updated, we will automatically notify you via email. This could be information such as non-payments to other customers, court actions or voluntary administrations.
Armed with this intelligence, you can avoid risky businesses and strengthen your ledger. Monitoring and alerts are fundamental to a reliable credit risk management strategy, providing small and medium sized businesses with the risk function of a much larger business and letting you sleep more soundly at night.
Debt collection tools
There will always be the occasional customer that doesn’t pay their invoice. Chasing debt can time consuming and awkward and takes precious time away from value adding tasks.
While a debt recovery letter is powerful in its most basic form, the addition of CreditorWatch branding adds teeth. Using CreditorWatch branded letters of demand has been shown to increase the chance of receiving payment by 53 per cent.
The customer knows that you have the full weight of a credit reporting agency behind you. If they default, you can choose to officially register this on the CreditorWatch platform, negatively affecting their ability to trade with other businesses and decreasing their credit score.
Registering payment defaults on the CreditorWatch platform has also proven to be an effective motivator for businesses to pay outstanding invoices.
