Author Vicky Han discusses the use of “Buyer Credit Risk Evaluation Tools” as a basis for entering into open credit transactions:  What is a “Risk Evaluation Model” and how to establish a “Risk Evaluation Model”?  The “Risk Evaluation Model” can be defined as a standard scoring system. For evaluating the buyer’s credit risk level, the buyer’s credit risk-related factors shall be listed one by one and graded and then the scores shall be summarized according to certain rule, so as to calculate the total scores. Finally, the buyer’s risk level could be determined as per the total scores. Of course, the “Risk Evaluation Model” is not a principle to be applicable everywhere. Each enterprise shall set up the custom-made “Buyer’s Scoring System”. As establishing a buyer’s credit risk evaluation model, four key issues shall be taken into account as outlined in the attached document.

Author Vicky Han is General Sales Manager, Business Information & Consulting Services, Sinotrust International Information & Consulting (Beijing) Co., Ltd.

BIIA Newsletter March I – 2010 Issue