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Why carry out credit analyses?

Why carry out credit analyses?In order to avoid litigation as much as possible, it is necessary to quickly identify the risks of non-payment. This is where credit analysis comes in.

The credit analysis studies the client's macro-environment:

The customer:

  • Financial situation: analysis of the balance sheet and the income statement
  • References: deadlines and payment behavior
  • Business development: strong potential, market position, age
  • Status: private or public company, shareholding.

  • The environment:

  • Market situation
  • Political risks
  • Export outside the EU: customs fees, exchange rate.

  • The offer:

  • Benefits: high margin, increased cash flow
  • Secure: credit insurance, documentary credit, etc.
  • Seller's limited liability.

  • What is the point of credit analysis?

    The credit analysis studies the financial situation of a customer as a whole and goes well beyond the financial aspect in order to better measure what would be the risks of granting credit to the said buyer.
    To minimize customer risk, you can also implement a risk management strategy .

    The Credit Manager, the profession associated with credit analysis

    The job profile may vary depending on the size of the company, the credit analysis is generally carried out by a Credit Manager or by an employee from the financial department.
    It may be a good idea to introduce a credit analyst early in your sales process to quickly identify creditworthy prospects.
    After that, comes the commercial negotiation, which will allow to validate the payment conditions, the contractual clauses and any guarantees associated with the contract.

    My DSO Manager, your credit analysis ally

    Software specialized in Credit Management and debt collection, My DSO Manager allows you to manage your customer risk on a day-to-day basis. Thanks to the different configurable payer profiles in your space, the reports and other scoring models, you will be able to enter your own scoring criteria and determine your credit limits for each client. Your customers will be identified in different groups ranging from excellent to very bad payers, from a risky profile to perfectly solvent.
    You can also connect the My DSO Manager solution with one of the services available in our constellation, for example credit insurers or financial information providers.