How to minimise risk in
your portfolio &
strengthen business resilience

By the editors
28 September 2023

Keeping Up with the Speed of Data

"While previous decades were about keeping up with technology, the leaders of the next decade will be keeping pace with data."

The global economic landscape is more challenging than ever, with persistently high inflation and interest rates, set against a backdrop of geopolitical upheaval. If you want to minimise business risk, a good place to start is your customers’ creditworthiness. Here are five tips on how you can protect yourself against payment defaults.

A manufacturer began producing goods for a client three years ago. The manufacturer checked the client’s creditworthiness at the start of the relationship to ensure they would be able to pay for the goods but hasn’t conducted any credit checks on the client since. “We didn’t see any need for action, given we checked the customer’s credit rating at the start of our relationship,” explains the company’s credit manager. 

Below are five top tips on how to minimise business risks in your portfolio.  

1. Use a traffic light system

Which customers bring in the most revenue and are essential to the success of the business? Segment your entire portfolio according to risk. Base the intervals between credit checks on how much your business depends on the customer in question. It also helps to divide the portfolio into risk classes based on the data provided by Dun & Bradstreet Singapore regarding the payment behaviour or the creditworthiness of a company.  

Customers that pay on time and have a good credit rating are placed in the green category. Companies that tend to pay late are marked yellow. The red category includes companies classified as particularly risky due to a poor credit rating or poor payment behaviour, for example.  

“The yellow and red business partners are at the greatest risk of insolvency. Credit managers should regularly check how the company’s key figures are developing in order to be able to take countermeasures at an early stage,” says Schneider. The credit policy should also specify the intervals at which green, yellow or red business partners are to be checked.  

A credit policy is a set of rules for credit management that describes roles, responsibilities and workflows related to the granting of loans and trade credit. In it, credit managers determine who is allowed to state the credit limit should a risk occur, and which priorities apply in a risk situation. In this way, a finance department can override agreed payment terms to minimise the risk regarding clients with questionable ratings. 

For banks, these rules can run to 150 pages or more. Usually, the length varies from 50 to just a few pages for smaller companies.

Understand more on the D-U-N-S® Number

“Many companies focus on checking new customers, which is important. But it is at least as important, especially in uncertain economic times, that you also check the creditworthiness of your existing customers at regular intervals. Today’s information is already out-of-date tomorrow.”

Keeping Up with the Speed of Data

"While previous decades were about keeping up with technology, the leaders of the next decade will be keeping pace with data."

2. It's not just financial figures that serve as the basis for decisions

When classifying customers, credit managers should make use of external data, for example from Dun & Bradstreet Singapore. And it’s not just financial figures such as liquidity or the equity ratio they should focus on. “Other factors such as the year the company was founded, the legal structure, affiliations or changes in management can also be very helpful in creating a well-rounded analysis. If a company has been successful in the market for 50 years, for example, it will receive a better classification than a company that was founded just a few months ago,” says Schneider.

When classifying existing customers, credit managers should also use internal data. How long has the business relationship existed? How reliable is the company with its payments? How big is the margin with the company in question? Is there perhaps information from the sales department on the company’s business? All these factors can be used for the credit assessment.

3. Define individual weightings

Once all the information about a customer is available, the individual parameters must be weighted according to the company’s goals. Internal and external data can be combined on an individual scorecard. The credit manager determines how strongly the factors are weighted in a credit assessment. “For some companies, the equity ratio is particularly important. Others place special emphasis on turnover. In workshops with our clients, the first step is to precisely analyse the actual situation and point out appropriate solutions.”  

When building a scorecard, it is especially important to test the process. To do this, credit managers should use a company that has a particularly good credit rating and one that has a poor rating. “This way, you can check how reliable your risk assessment is.”

4. Personalise risk management

D&B Finance Analytics also allows companies to personalise their risk management by combining their own debtor data with Dun & Bradstreet Singapore industry-leading data and analytics for smarter decision-making. “By feeding your own data into the solution, D&B Finance Analytics provides an all-round view of the total receivables in your portfolio. It then combines this with Dun & Bradstreet Singapore predictive information to give you a view of risk within the portfolio,”

5. Receive information automatically

In addition to D&B Finance Analytics, Dun & Bradstreet Singapore also offers the possibility of running data automatically via an application programming interface (API) directly into your enterprise resource planning (ERP) system. This ensures that the data in your systems is continuously and automatically updated, and you can make your decisions based on up-to-date information at any time.

Understand more on the D-U-N-S® Number


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