How can you assess the financial health of a partner when extending trade credit? What are the solutions available to anticipate a potential non-payment by a partner? What are the best market opportunities for developing your business while cutting back on risk? Coface's information services help you make informed decisions, so you can control commercial risk and open up new growth opportunities.
What is business information?
Before embarking on a business relationship with a trade partner, you need to collect and analyse a large amount of financial data. Why? So you can have a better picture of your prospect or supplier – and so you can trust them! That’s why commercial risk management is so important for any company that wants to develop itself.
Business information is a powerful decision-making tool: it is vital for benchmarking the solvency of your trading partners and crucial for steering your credit risk strategy in the right direction. It combines unique commercial data with qualified financial information: this gives you access to a depth risk assessment – or even predictive analytics in some cases – about the financial health of your partners (clients and suppliers).
Business information is a cornerstone of business intelligence: a suite of cutting-edge solutions based on exploiting a wealth of data and harnessing new technology.
Information is knowledge, and knowledge is power: getting your decisions right means managing risks more effectively and making it easier to spot new development opportunities!
What information matters most?
Despite all the valuable precautions for protecting against the risk of unpaid invoices (especially credit insurance solutions), late payment and outstanding debt are risks that are built into any business relationship. It follows that the ability to anticipate the likelihood of non-payment is paramount for any company.
First, you need to gauge the financial health of your trading partner, and their ability to fulfil their obligations in the short and medium term and throughout the business relationship. To steer clear of bad deals and reduce risk, you need to know information about your partner, their payment behaviour and their business; in addition, you need to be able to interpret their financial soundness indicators and credit history.
You can use two key data sources to collect the preliminary analytical information:
- Public data: balance sheets, profit and loss accounts, debt status, turnover, volume of outstanding liabilities, burden of expenses, cash flow, etc. The economic analysis of this public data (when it’s available!) gives you an early indication of your partner’s ability to pay. But be careful: this type of data is finite and reflects your partner’s past situation. There’s an interval of several months between the reporting date and the date a balance sheet is published.
- Private data: this information is updated periodically and in more detail; in addition, data from private sources is more reliable. It follows that professional business intelligence is a good source of information that complements public data. It can be used to fine-tune the analysis of your partner's situation and how it’s likely to evolve in the months ahead.
If you want to quantify the risk as accurately as possible, however, your partner’s credit rating isn’t the only important factor to consider. You need to analyse its overall situation, its 360° relationships and its sector by scoping out its position in the supply chain. In other words it’s not just about knowing who you are selling to but also who you are buying from... and the extent of the risk involved. And this is exactly where Coface can help you!
Transforming data into knowledge and capture new growth opportunities
So, you now know what information you need to have a better assess your partners’ financial situation. But how can you leverage this wealth of data to plan your trade strategy effectively and restrict your risk?
Your customers and prospects nowadays expect you to respond quickly to their requests about trade credit: if you spend too much time reviewing their situation, there’s every chance you will miss out on a (good?) deal. But if you press ahead too quickly, you might end up acting either too cautiously or too optimistically, which would inevitably have an impact on your company’s financial return and liquidity.
iCON by Coface provides unique insights into your business environment and gives you a competitive advantage:
· Information reports: Coface calculates a risk profile on your behalf so you can find out everything there is to know about the financial health of your partners and their payment behaviour.
· Credit score: Coface’s non-payment risk analysis helps you estimate a partner’s ability to meet its financial obligations over the following 12 months (strength, profitability, solvency ratios, payment and claims experience).
· Custom-built credit notification: assess how likely it is that a company will fail; control your risks using a bespoke, easy-to-understand credit recommendation that includes country and counterparty risk assessments alongside Coface’s instant credit recommendations.
· Financial ratios: Peer Groups delivers penetrating, easy-to-exploit insights via a data science solution that means you can compare the financial ratios of a company with its peers’.
· Economic insights: this dynamic dashboard helps you predict risks and pinpoint the top investment opportunities by country and industry at a glance. It draws on data science, key economic indicators and scores generated by Coface’s economists: the business environment and macro-economics; the banking, environmental, political and social risks; the payment index and buyer risk, etc.
Explore iCON by Coface and take the best credit decisions so you can manage your business strategy and trade on a competitive advantage over your rivals!
Transform your business with iCON by Coface today, and discover a world of possibilities through the lens of information.