Credit risk - also known as the risk of default, insolvency or delinquency - represents a major threat to companies of all sizes.
In large organizations, this risk is generally managed by the credit manager, but in smaller ones it may be the responsibility of the administrative and financial manager, or directly by the director.
Because an unpaid bill can weaken a company and have a domino effect on all its commercial partners, this risk is one of the most closely monitored.
A pervasive risk in the business relationship
This applies to all companies that grant payment terms to their customers. As soon as a service is rendered or an order delivered before payment has been received, the risk of non-payment becomes a reality.
In France, inter-company credit represents 800 billion euros, five times more than short-term bank loans. A genuine source of financing for the economy, whose main lender is none other than... the supplier.
But this informal bank is fragile: every year, 56 billion euros of receivables go unpaid. Some of these will never be recovered, particularly in the event of bankruptcy proceedings affecting a customer.
Failure to anticipate credit risk puts your business at risk
If you don't manage this risk, you run the risk of never getting paid. A quarter of all business failures are directly linked to payment defaults.
For a long time, credit risk was managed reactively, or even neglected in the face of risks perceived as more controllable (technological, physical, etc.), yet it is a key factor in a company's financial health.
Too many companies discover their exposure to this risk when it's too late. Yet the best way to manage credit risk is to prevent it in the first place:
It's always a good idea to assess a customer's financial soundness before starting a business relationship.
It's better to avoid a risky contract than to have to deal with a default with serious consequences.
A payment default has a direct impact on cash flow and generates a net loss of sales.
Anticipate unpaid bills: your cash stays with your company!
An effective credit risk management solution enables :
✅ Anticipating insolvencies and avoiding unpaid debts: in 2024, over 66,000 businesses filed for bankruptcy.
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✅ Eliminate late payments: a reduction of just a few days has an immediate impact on your cash flow.
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✅ Reduce litigation: a controlled process allows you to focus your resources on developing your business.
Secure your sales and develop your business over the long term
Checking a customer's financial situation before entering into a business relationship is the key to long-term business development.
In-depth knowledge of your customer portfolio enables you to secure your cash flow over the long term and focus your efforts on reliable partners.