Recent news reports have shown a long list of companies entering external administration and having issues with bad debt. The increasing number of organisations finding themselves in trouble indicates a greater need for companies to pay closer attention to credit risk management.
Veda’s Business Credit Demand Index for the December 2011 quarter showed that mainly small and medium sized businesses (SMBs) are suffering from a high default rate with more than a quarter (26%) of defaults. But what’s behind the story of so many struggling businesses is not always clear. “Before signing up new creditors, most businesses should perform a thorough check on the company and its Director(s) to evaluate their risk exposure,” explains Moses Samaha, Head of Commercial Risk at Veda. By better understanding credit and fraud risk at the point of application, this can reduce the incidence of bad debt write offs and ultimately improve the bottom line. But according to Moses “Good credit management doesn’t stop there. Businesses should also continue to monitor their credit portfolio to limit exposure to risk from late payment and external administration.”
Source: Veda Press Release
