A blog by Martin Williams, external affairs spokesman of Graydon UK, focusing on business risks - from fraud to late payment. Martin has has spent the last 35 years in the credit information industry, and has been with Graydon UK, one of the top five commercial credit agencies in the UK, for the last 20. Apart from his PR duties, he teaches credit analysis to risk professionals and helps educate SMEs on the importance of maintaining a good credit rating. Martin is a Fellow of the Institute of Credit Management and is a sitting member of the Institute's Think Tank. He was also honoured by Credit Today, after being included on their Credit 100 list of people who have had the greatest impact in the credit industry during 2008, 2009 and 2010.
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28 Jan 2010
As a credit information man, I'm always trying to persuade businesses that good credit scores can directly impact their cash flow positions, so i was particularly pleased to hear yet more clear evidence yesterday from a bunch of credit managers as to how this can happen, in order to back up my perennial arguments on the subject.
Many credit departments nowadays are buying in software packages that help drive cash collection actions. Yesterday i heard from credit managers who allocate colour codes (green, amber , and red) to all existing credit accounts on their sales ledgers depending on the credit scores of their clients. If payments become overdue from a "green" client (one who has a good credit rating), some leeway is given before chasing up strenuously , whilst if payments are beyond due date from a "red" client, they're chased immediately for the money. thus proving that companies with good credit scores can obtain extended credit far more easily than poor rated ones. if the "green" client has 15 or so more days in which to pay because the supplier has less concern about a bad debt arising, you can see how less pressure is brought to bear on his cash flow position, particularly if this was repeated many times over by different suppliers.
Companies should understand much more about how their credit ratings are produced by agencies like Graydon and D&B, and what they can do to try and improve their own credit ratings. As an industry, the credit reference fraternity is realising that its got to be more transparent about how it goes about its business, so expect some useful material on the subject coming into the market soon- that's a promise!
Visitor comments
I love the fresh perpective you did on the subject. Surely was not thinking that when I started off reading. Your concepts were convenient to comprehend that I thought about why I never considered it before. Relieved to find out that there is someone out there that definitely understands what he is discussing. Awesome job!
Posted by: Jetta Cozzone , 13 Feb 2010
There are many ways to make your credit report and cash flow look better. The best way is to pay your debt. Write all your debts down and arrange them from most to least important.
For example – debt that has a serious direct impact on your financial life; debt that can lead the creditor to take back the good item or property; and debt that that can seriously affect your credit report the most – these are the ones that should be given priority.
Among these specific priority debts are:
Power or current and other utility bills. They can – and they WILL – cut off your power and other services if you neglect to pay them on time.
You can put your doctors in the second slot. There are doctors that refuse to see you unless you have paid all your past dues; although this is not something to worry about, because you can easily find another doctor.
The third in your list should be for mortgages. This can be put off for at least a month or two, but you still have to deal with it afterwards. Banks are usually patient when it comes to foreclosing properties since it is time consuming and expensive.
You can put your credit card bills last on this list because they can only bother you for so long; and they cannot go to court until after two months.
Posted by: Scott , 20 May 2010
Very insightful post. I would also like to add that having no credit history or a lack of it can really hurt your credit score too. This might put you in the "red", as well. Another thing that people commonly don't do is leave their credit cards open once they pay off their cards. Even if you never use your credit card again, it is a great idea to keep them open.
Thats just my two cents :)
Posted by: Chris , 06 Jun 2010
When I stumble upon a great blog post I usually do some things:
1.Forward it to all the close friends.
2.keep it in all my favorite social sharing sites.
3.Make sure to come back to the same blog where I read the post.
After reading this article I am seriously concidering going ahead and doing all 3...
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