Debtor Risk Assessment
Banks and other lenders don’t offer finance without asking a lot of questions and ‘big businesses’ won’t offer you a trade facility without undertaking a lot of checks. No business should extend trade terms and provide credit without understanding a few basic things. It’s easy and won’t take much time to establish a standard debtor risk assessment process you can confidently and easily use time and again.
You can then make an informed decision on whether to offer trade terms and extend credit and over what period. Your debtor risk assessment may also mean you will strictly cash only terms. Minimal fuss, minimal time, minimal risk.
The first step in assessing debtor risk is to make sure each of your customers completes a commercial credit application form. Brodie Credit Control Solutions provides Commercial Credit Account Application and Agreement form templates that you can customise to meet your needs. It’s designed to ask all the right questions without being overly cumbersome to your customers – so there is no excuse for them not to complete it!
The second step, once you have received the completed credit application form, in assessing debtor risk, is to understand and verify the information on the form. Managing debtor risk means that you cannot simply accept what has been stated in the credit application form. Brodie Credit Control Solutions can assist with verifying the information on the forms We can verify the information through various ASIC checks – eg we can check whether the person listed is in fact a director of the company.
Brodie Credit Control Solutions can also provide you with a report that includes:
- Company and Business Search
- Land Titles Search
- List of potential risks (where applicable) eg:
- whether there are any charges over the assets of the company
- whether the residential property listed is actually owned by the director
- how recent is the date of registration
- if there is parent/holding company behind the applicant
- Review of template forms to ensure they have been completed & signed correctly
- Rating the risk category of the application to enable you to determine a suitable credit limit