Credit where it's due - mitigating risks of client solvency

Introduction

A fundamental question when deciding to supply a good or service to a customer is, will they be able to pay you? Whether you are providing credit facilities or requiring cash on delivery, it is imperative that a client is able to provide payment. Whilst it is often impossible to predict whether a client will fulfil their responsibilities, there are certain steps that you can take to minimise the risk of your business incurring a bad debt. One of these steps is researching the potential client on CreditorWatch.

What is CreditorWatch?

CreditorWatch is an Australian credit reporting agency that can be used by both big and small business. Basically, it taps in to a vast number of sources to gather data and present a report on the business that you choose. The sources that are used include ASIC reports, court reports as well as information from other CreditorWatch users.

CreditorWatch has files on almost 11 million commercial entities in Australia. To check whether there is a report about a particular business, search here. Without a CreditorWatch membership you will only be able to view very basic details – for information about obtaining a membership and what Sync or Swim can offer, please see below.

What does CreditorWatch provide?

As mentioned above, CreditorWatch is a credit reporting agency. This means that they provide all types of information that relates to whether or not the company should be provided credit. Consequently, the primary function of CreditorWatch is the provision of Credit Reports and Credit Scores. The report compiles information from a variety of sources into one document – based on this, CreditorWatch rates the business on how risky they are to lend to.

This document may include information such as the address of the business, any directors, share capital and any legal claims against the business such as a payment default.

If you would like to look at an example Report, please click here.

In addition to this, CreditorWatch has numerous other features such as monitoring & alerts which allow you to be notified if something significant happens to a business that you are following. You can also track a business’ history, notify other users of an issue that you have had with a business and access a variety of debt collection tools.

CreditorWatch options

As eluded to earlier, all these features can be accessed using a CreditorWatch membership. There are currently three types of membership that you can obtain. These vary in price from $29 per month up to $60 per month and the more you pay, the more you can access.

For a list of what you can access under each type of membership, please click here.

There is a further option of purchasing individual company reports without a subscription. These can range in price upwards of $50 and provide much of the basic information that is available under a subscription.

If you would like to look at an example Report, please click here.

How Can Sync or Swim help?

Instead of signing up and paying a subscription fee, Sync or Swim can conduct a search for you in a more cost effective manner. In ballpark terms, Sync or Swim can offer clients individual reports for $10-$25, or unlimited reports for $100 per year. For further information on this, and confirmation of exact pricing, please contact Sync or Swim at sos@syncorswim.com.au.

Conclusion

CreditorWatch isn’t the be all and end all when it comes to extending credit, however it can be an extremely useful tool to gather information on a potential debtor and it would be wise to utilise it when considering your business’ credit facilities.

Information contained in this article is general in nature, and is not offered as advice specific to your business. Under no circumstances is it to be construed as advice pertaining to credit, credit strategy or a company's corporate finance. If you think the topics discussed in this document could be relevant to your business, please contact Sync or Swim or your accountant.