Customer Risk Assessment.

Helenb

I have been asked to perform a risk assessment on one of our existing customers to see if we wish to continue doing work for them. I have done a credit check and am now wondering what else should be done. Does any one have any ideas? I have not had to do this before so any advice is gratefully received.

Thanks
Helen

farmergiles

Helenb wrote: »

I have been asked to perform a risk assessment on one of our existing customers to see if we wish to continue doing work for them. I have done a credit check and am now wondering what else should be done. Does any one have any ideas? I have not had to do this before so any advice is gratefully received.

Thanks
Helen

I would suggest checking their payment history.
From experience, I often find that a client with cashflow problems normally increases their buying whilst taking longer to settle their accounts. By watching this carefully, one is normally able to anticipate client business collapse and, hopefully, not leaving your own company open to large debt that there is no way of recovering.
This will enable you to reduce their credit limit and hold back on any work you may be about to undertake until the last work is paid for.

Kind regards
Peter

blobbyh

Hi Helen, I don't know what type of business you're in but also look at orders possibly increasing over the last few months - both in value and frequency. I echo what Peter has already said, that any sharp or unusual rises with you could mean their credit is being contracted by alternative suppliers elsewhere. It doesn't necessarily mean they're nicely giving you all of their business but could rather be an indication that their credit supply has dried up with everyone else!

Jon_1984

One other piece of advice is talk to your sales staff/their account manager or whatever you have in their place. Are they replacing assets or running them into the ground, are they still in the same frame of mind/attititude when dealing with your sales staff and take their gut instincts into account or comment on them.

If there are other changes to order profiles (e.g. more urgent small orders, than larger regular ones or so on) it can be worth examining.

The other standard area is changes to the key ratios.

Has your employer carried out any risk assessments in the past on other clients? If so can you look at one to see what they expect in it?

Helenb

Thanks for all you help! :001_smile: