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Company monitoring: five tips for monitoring your business partners worldwide and preventing payment defaul

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Real-time company monitoring is a key task in credit management. Only companies that check their international business partners on a regular basis can take steps early to prevent payment defaults in the event of changes.      

 Customers that pay on time today can easily slide towards insolvency tomorrow. In uncertain economic times, like those we are experiencing today through the Russia-Ukraine War and the COVID-19 pandemic, it is all the more important to monitor your business partners regularly. Real-time data on the economic situation of a company form the basis for such monitoring.  

“The sooner credit managers notice changes in business partners, the quicker they can act to change payment conditions or, for example, look for alternative suppliers. Daily risk monitoring is essential for staying up to date and preventing payment defaults,” comments Daniel Schneider, Senior Business Consultant at Dun & Bradstreet Central Europe.  

Here are five tips for monitoring business partners worldwide.  

Tip 1: Use real-time data 

Using real-time data is crucial when monitoring companies – information on the company’s economic situation that is updated on a daily basis.  

D&B Finance Analytics from Dun & Bradstreet gives you global insight into the credit risk of more than 455 million companies worldwide. The online platform gives you access to up-to-date information on a company’s financial situation, providing a precise overview of the current credit risk posed by each of your business partners.       

Tip 2: Focus, focus, focus – on the data relevant to your company!

It’s great to have data. But which data is actually relevant for you?   

Identify which data is important for your risk assessment. For some companies it is important to know when an authorised signatory changes, while others wish to be notified when payment behaviour deteriorates. This can be configured individually in D&B Finance Analytics. You will not receive countless email notifications in the event of changes at one of your customers or suppliers – just the information that is relevant to you.  

“Sometimes, you cannot see the wood for the trees. That makes it all the more important to focus on the key information and specify clear rules, for example which score triggers a notification so you can check on your business partner,” explains Schneider.

Tip 3: Rely on the right real-time data

If a customer suddenly stops paying its invoices on time, this is an indication that the company is no longer solvent. Dun & Bradstreet’s Paydex is an early warning indicator that shows how the payment behaviour of a company is changing. It should be part of every company monitoring system.   

The Paydex score is calculated on the basis of payment experiences. Customers and suppliers worldwide send information on their payment experience with a company to Dun & Bradstreet. Based on this data, the companies are given a score of between 1 and 100 – the higher the number, the likelier it is that a company will pay its invoices on time.  

Financial figures from the balance sheet and the profit and loss statement also represent important real-time data for company monitoring. Another possible key indicator is a change in the number of employees. In such cases, it is essential to find out why the number of employees has fallen. Is the company having financial difficulties, or have parts of the company been sold? “Credit managers have to check and understand all of this in order to initiate the right measures and adjust payment deadlines or credit limits,” comments Schneider.

Tip 4: Make the right credit decisions worldwide

Global corporations work with more than 80,000 suppliers, so maintaining an overview of how each supplier is developing financially is a challenge. For a start, the economic situation in each country is different.  

Dun & Bradstreet offers data on companies from more than 220 countries, from France and Switzerland to the Dutch Caribbean Island of Curaçao.

Tip 5: Make the right credit decisions automatically

Alongside the web-based D&B Finance Analytics solution, Dun & Bradstreet also enables its customers to transfer data directly to their ERP (enterprise resource planning) system automatically via an API (application programming interface). The data is updated continuously and automatically, so you can make decisions based on the latest information at any time.  

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