D&B Offers Pandemic-Related Risk Mitigation Guidance
Tuesday, April 28, 2020
In light of the massive disruption to the economy resulting from COVID-19 pandemic mitigation practices, many credit managers are adjusting their practices. NACM North Central credit reporting partner Dun and Bradstreet is advising that companies reevaluate their credit policies to ensure they are:
- Onboarding an Appropriate Balance of Risk: A prolonged period of economic prosperity and minimal bankruptcies may have influenced the day-to-day credit policy approach, allowing more risk into the portfolio than would be prudent in a slow growth or recessionary economy. Reassess your company’s credit policy to recalibrate the portfolio risk profile for new and existing customers.
- Setting Proper Credit Limits: Use this opportunity to realign credit limits. Make sure they are informed by the credit exposure you have for the entire global corporate hierarchy for that customer. Consider adjusting credit limits (up and down) based on the individual risk assessment of that customer.
- Establishing Appropriate Terms: Evaluating the potential risk of each new opportunity or customer renewal will help realign your credit terms based on the probability the customer will pay on time and within terms.
- Monitoring Portfolio Risk: Perhaps more urgently, D&B advises to also consider deploying credit risk monitoring of the entire global portfolio to pick up on pockets of weakness that could result bad debt losses from potential bankruptcies.
D&B also put together this on-demand webinar to guide NACM members using its solutions to help them implement these suggestions: