This publication titled “Business Credit Risk Assessment – A Guide to Identifying Credit Risk” serves as an essential primer for those individuals within your organization interested in learning or polishing their skills in the art of credit risk assessment.
It brings to the forefront the key elements that need to be considered when assessing your business customer’s credit viability. Because it is being distributed electronically it can be retained and distributed to the credit staff to be printed for future reference or easily accessed on line.
Not all customers have the financial ability or willingness to pay within terms-a fact supported by overwhelming evidence in the marketplace. Therefore, the existence of customer credit risk is not disputed and the only question is how a company decides to manage the issue. Credit risk has the potential to negatively affect working capital and cash flow results, require additional administrative resources to pursue slow/uncollectable receivables and in some cases will impact the bottom line through write offs. All visible costs. In addition, largely hidden “lost financial opportunity” costs also accrue the longer it takes to collect money.
Simply put, risk has costs and higher risk typically generates higher costs, which creates economic incentive for recognizing and addressing the issue early in the business cycle.
Over 50 pages