From The Virtual Credit Manager
8 Factors to Consider When Evaluating Customer Creditworthiness & the 5 Primary Data Sources that Inform Credit Decisions
Creditworthiness refers to a business’s ability to repay its debts. A customer that has a history of paying their debts on time and in full has clearly been creditworthy, but will they continue to pay within terms on their next order, or six months from now, or a year from now?
The further you project into the future, the less certain you can be about your customer’s creditworthiness. This is why companies continue to sell to business customers that appear to be facing financial difficulty. For example, there are firms burning through their cash reserves that may still be considered worthy of credit on their next order, but not the order that comes in three months from now. That’s because they have yet to reach the tipping point where they must start paying some invoices beyond their due dates. Click here for the full article