There are many issues to watch out for when executing proper credit ratings, which need to be continuously updated so that the rating remains accurate.
A good example of the challenge of continuous assessment is the impact of the Corona crisis on the food industry. A supplier of food to restaurants, which normally has a credit score of 10*, suddenly achieves a credit score of 3, as all restaurants were suddenly closed due to corona. Now you, as a company, have to decide whether to change your credit terms or stop working with us altogether. It is therefore essential to monitor your customers, as their creditworthiness and credit score can change over time.
There are credit rating platforms that provide continuous credit ratings, which are automatically updated. An example of this is the Risika platform, which uses an algorithm that takes into account key figures, industry, bankruptcies and more. This allows you to focus on maintaining and building profitable customer relationships while the credit rating is being done elsewhere.
*10 is the maximum score on a credit report. If a credit score is 7 or above, the company is in the 'Low risk of bankruptcy' category. Read more about Risika's credit scoring here