How may times have you spoken to a friend, customer or colleague only to find out that a business that owed them money or was supposed to provide a service has gone under?
The impact it has on most people concerned is terrible, not least for the companies who supplied goods or services only to lose out on thousands. The question is often hear "how could this be avoided" Especially when the firm going under has been a loyal client or supplier for years?
KYC (Know Your Customer), a huge subject we could discuss for hours, for the purpose of this lets look at it from credit check and health scoring perspective.
KYC doesn't just stop with the checks you do prior to working with them the first time, it's an ongoing process, as many have unfortunately found out, things do change so it's really important that you always keep a real close eye on the financial status of clients/supplier, after all would the bank you've had an account with for years lend you thousands without checking your good for it properly?
It's important that the checks you use are more comprehensive than a standard credit report, or one only shows last years figure. What you really want to know is not just their track record but also their financial strength now, what's happened in the last couple of days and how that going to affect you if you extend them credit.
For example last years accounts might look good, on the basis of that you extend credit. What you don't know is that in the last few days there has been CCJs, accounting date changed, director resigned and a winding up petition. Based on this there's a high probability that the company has financial troubles and extending credit wouldn't be a good idea!
As you know there are many events that can affect a businesses health, on the outside, as with humans your not going to know them all and despite what people may say there is only one way to find out, KYC, get up to date, accurate intelligence that has a health score based on today, not last week, not last month but today. After all the health of your business is as important as your own health and we all know how easy it is to hide pain when we need to, don't get caught out!