Business Credit reports

How to use business credit reports to avoid supply hoppers. By Michael Pollack, Head of Content, CreditorWatch.

As a creditor, you want to be sure that your debtors can repay their dues and that each customer is reliable with a trustworthy credit history. CreditorWatch is Australia’s leading credit check business. Our business credit reports help you identify risky customers, allowing you to proactively mitigate risks to protect your business. One of the worst offenders you’ll need to look out for are supplier hoppers – those who jump between creditors to place orders and continue to trade with businesses they can’t afford to repay. At first glance, these customers may appear innocuous, but a quick audit of their company credit report will reveal warning signs. The dangers of supplier hoppers

If you were to do business with a serial supplier hopper, you’d be putting yourself at risk of a costly customer, who will drain your team of time and money as they chase up debts in vain. The legal proceedings that come with a supplier hopper who defaults on their debts can sometimes be more trouble than they’re worth, so it’s best to avoid them in the first place. How to identify a supplier hopper

When you perform a credit check on a business in order to identify a supplier hopper, there are a few red flags to look out for: • There has been an unusual amount of credit enquiries. This would imply that the applicant has contacted a number of creditors and has been unsuccessful. It would be wise to follow up and find the reason behind all of the enquiries. • The applicant is inconsistent with their ordering and jumps on and off your ATB in monthly intervals. • The director holds multiple directorships. If the director is involved with illegal phoenix activity – where companies are abandoned to start new ones in order to avoid their debts – approving their application could be very risky. • And most obviously, slow payments or multiple payment defaults lodged against the company. Using business credit reports to protect your cash flow

As you begin checking business credit with our reports, you will see business credit scores from A1 to F, which provide a quick indication of an applicant’s credit history. You will also see our Payment Predictor, which reveals if a customer’s payment behaviour is worsening over time. This is important as deteriorating payment behaviour is a clear sign of financial distress. Our credit reports contain valuable information such as the number of credit enquiries, payment defaults, relevant court actions, cross directorships, and other adverse data. We rely on over 50 private and public data sources to give you up-to-date and exclusive information to aid your decision–making process. It is important to continue monitoring your customers for suspicious activity after they’ve been approved, in case a supplier hopper ever sneaks through the cracks of your rigorous business credit checks. DebtorLogic is another credit risk management tool which allows you to take a proactive approach to debtor management; supplier hoppers can be identified much quicker with the right technology at your fingertips. Its data-driven analysis of your ATB allows you to delve deeper into customer payment trends to judge their ability to uphold their end of the bargain. Any customer that isn't above board can be easily singled out and your customer list will come up looking cleaner and more reliable than ever.

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