Credit referencing is a critical part of any credit control procedure. With the UK economy facing uncertain times it is important that businesses protect themselves from bad debt.
SME lender Funding Circle recently revealed that it expected a higher percentage of loans arranged in 2018 to default – between 3 and 3.8 per cent – and that this is indicative of the current trading environment.
It’s not just SMEs, as a raft of administrations and profit warnings from larger businesses indicates that business distress is affecting all types of business.
Given recent events regarding Brexit, upwards pressure from business rates and rising interest rates, troubling times are here to stay.
Irrespective of the macro trends it makes sense to have the best credit control procedures in your business. In this article we’re going to take a look at how Red Flag Alert helps keep your credit control procedures ahead of the curve.
Introducing Red Flag Alert
Red Flag Alert is a business intelligence database that holds detailed, up-to-date information on all UK businesses and owners. Red Flag Alert’s dataset is used by businesses for a range of reasons: building targeted marketing lists, commercial due diligence, and maintaining best-practice credit control procedures.
Credit Control Procedures
Red Flag Alert has extraordinary value as a business credit referencing tool because:
- It is updated every day – on average 50,000 updates – using 10 market-leading data owners.
- The dataset covers all businesses and owners, including new businesses as they are formed.
- It provides detailed information that allows for deep analysis of any business.
- Highly specific financial health ratings that incorporate all available data give a prediction on future insolvency.
Financial Health Ratings
At the heart of Red Flag Alert’s data is its proprietary financial health rating system that allocates a rating to every business. There are seven levels – from gold to three red flags – and these levels can be used to predict the future chance of insolvency, so they’re a critical tool for credit control teams.
Red Flag Alert uses a scorecard method that takes into account all available data to give unrivalled industry-specific risk ratings.
Red Flag Alert’s software was developed initially for use by the UK’s leading business recovery firm – Begbies Traynor. They developed it specifically to find businesses in financial distress that would benefit from their services. The tool helped Begbies Traynor grow into the market leader it is today and over 13 years has been refined to become the most accurate and useful business credit referencing tool on the market.
How Red Flag Alert Helps
Red Flag Alert helps your business excel at credit control, helping you seek out and evaluate financial issues before they cause bad debt and big losses.
Make Informed Credit Control Decisions
Many businesses use the Red Flag Alert financial ratings as a critical first line in making credit decisions. This is particularly useful for businesses that deal with a high volume of clients, for example, energy brokers or insurance brokers.
Once a business has decided on the level of client risk it is willing to accept, Red Flag Alert is perfect for assessing whether clients exceed that risk. Red Flag Alert users can trust they’re using the most relevant data and save a considerable amount of time conducting bespoke due diligence.
Conduct Detailed Due Diligence
If a situation warrants more detailed due diligence, Red Flag Alert is the perfect tool for this situation.
Sometimes the decision whether to extend credit to a key client is difficult – perhaps the business has a borderline credit rating and they make up a large chunk of revenue. This can be common in certain sectors like construction where a small business can be financially exposed to one much larger client.
In these cases, further exploration of a business’s financial health makes sense – Red Flag Alert enables this detailed analysis. It also has a team of credit experts willing to support users with more detailed financial assessments.
Be Alerted When Problems Arise
One of the key benefits of Red Flag Alert is its real-time monitoring capability. Users can set up monitoring to let them know if any key client information changes. If a client becomes financially distressed you will know immediately, enabling you to take action.
Speak to an Expert
If you are looking to develop your credit control process, monitor clients and generally de-risk your business, then Red Flag Alert can be the perfect partner.
Red Flag Alert is not just a credit risk management software solution – we have a team of expert credit analysts and data specialists that work with you to deliver the best possible credit control process and use micro-level data to provide accurate company insolvency scoring.
To arrange a free consultation with one of the Red Flag Alert team, book a demo today.
The team can help:
- Evaluate the efficacy of your process and suggest improvements.
- Demonstrate the value of detailed financial information and monitoring data.
- Answer your questions on using data to drive credit control.