What Is Business Credit Risk?

Commercial credit risk refers to the possibility that in the course of a transaction that uses credit relationships as a link, one party to the transaction cannot fulfill its payment commitments and cause losses to the other party. The main performance is that the company cannot recover the receivables due from customers , Generating bad debts, bad debts, causing conflicts in supply and demand of funds, causing a break in the capital chain, and eventually leading to bankruptcy.

Business credit risk

Commercial credit risk refers to the possibility that in the course of a transaction that uses credit relationships as a link, one party to the transaction cannot fulfill its payment commitments and cause losses to the other party. Its main performance is that the company's customers fail to pay the payment or fail Ability to pay.

The company's biggest and longest-term wealth is its customers, but its biggest risks also come from customers. Many companies due to

In modern economic society, commercial credit is gradually recognized and accepted, and more and more commercial activities are established on the basis of commercial credit, and the resulting accounts receivable are also increasing day by day. Commercial credit risk is manifested in the inability of corporate accounts receivable to be recovered, resulting in bad debts and bad debts, resulting in the contradiction between supply and demand of funds, causing the breaking of the capital chain, and eventually leading to bankruptcy.

At present, China has the following problems in terms of commercial credit:

(I) Arrears among enterprises

(2) High contract default rate of enterprises

(3) Many fake and shoddy products

(IV) Tests on Government Credit and Legal Majesty

The dangers of commercial credit risk

(I) Harm of commercial credit risk to enterprises

1. Serious loss of corporate funds

2.Systematic risk of corporate fund chain break

3.Lack of business credit damages corporate image

(B) the harm of lack of commercial credit to the macroeconomic order and economic system

1.Lack of commercial credit disrupts economic order

2.Lack of commercial credit causes huge losses to the country

3. Lack of commercial credit leads to distortion of social related systems

Commercial credit risk management is an important means for modern enterprises to improve their profits and increase their operating cash flow. It directly determines whether the company can provide sales to strategic customers with the right products and strategies, and effectively and promptly realize payment recovery. Necessary conditions.

As more and more Chinese enterprises transform from traditional production-oriented enterprises to market-oriented enterprises, in the increasingly fierce market competition, maximizing effective sales will be the inevitable choice for each enterprise to achieve excellence. Zhengming Mingcheng's business risk management consulting team helps companies formulate timely and accurate credit management strategies based on market needs, structure a competition-oriented credit risk management organization, formulate fast and effective credit evaluation systems and systems, and optimize corporate sales management Processes, reengineering credit risk management processes, and coaching and assisting in the execution and implementation of processes to ensure a systematic improvement in customer operating performance.

Examples of common business credit risk management issues for Chinese companies

1. No clear credit management strategy guides credit management policies

2. No clear authority or department to manage

3 Relatively weak awareness of credit risk among internal staff

4 Lack of necessary credit management knowledge and skills

5. Lack of comprehensive customer information management and update methods

6. Credit risk management process is not standardized and rigorous

7. Credit management evaluation system is not scientific and easy to operate

8. Lack of credit management strategy for industry or product segmentation

9. No perfect credit risk management system guarantee

In short, the credit management of enterprises needs to address three major categories

1. Credit risk management foundation is not strong enough

· The foundation of corporate credit risk management is not perfect due to the promotion of internal control system;

· Re-formulate and revise the system in accordance with internal controls and requirements to make credit risk management related supporting documents relatively complete;

· According to the goals and new requirements of the company's development strategy, the credit risk management system still needs to be further standardized.

2. Credit risk management efficiency needs to be further improved

· Some credit risk management processes are too long or disconnected;

· The departmental responsibilities involved in cross-sectoral processes are not clear enough;

· Multi-sectoral push to cause trouble in process operation under certain conditions.

3 The standardization of credit management needs to be improved

· The process from sales to cashback based on the internal control system is an important process for the company and requires uniformity and standardization;

· There are some differences in the implementation standards of internal management and credit management system processes in some departments.

Zhengming Mingcheng Commercial Credit Risk Management Consulting Methodology

Zheng slightly Mingcheng believes that enterprises are a response system to market demand. The basis of differentiated operation comes from the in-depth excavation and understanding of market demand and the degree of competition. Through the establishment of a credit management strategy, the company's various businesses are re-positioned to plan out the value chain and risk circle of each business, and develop corresponding credit Manage the combination strategy, then according to the developed credit management strategy and effectively structure the credit evaluation system around the customer, apply the credit policies, credit standards and credit conditions based on the evaluation system, allocate various resources to establish an effective credit management system, and finally Through the effective credit management process and effective implementation of the credit management system to complete the transfer of sales and the realization of accounts receivable. Throughout the whole process, Zhenglui Mingcheng insisted that credit management is the foundation of financial risk management and successful marketing, and perfect methods, systems and processes are the guarantee of financial risk management and successful marketing.

Zhenglui Mingcheng Commercial Credit Risk Management Consulting Solution

The establishment of a credit management organization and system through the formulation of a credit management strategy, combined with scientific and easy-to-operate credit management evaluation standards, and a sound credit management system.

· Corporate credit strategy planning based on corporate strategy

· Segmented credit management strategy planning based on business planning

· Credit management system optimization and change management

· Credit management process reorganization and organizational design

· New business (product) development and marketing strategy based on the enhancement of credit management value

· Customer credit evaluation method based on market competition factors

· Marketing strategy implementation and executive coaching

Customer profile and customer relationship management

1. Comprehensive management consulting system. Zhenglui Mingcheng will give full play to its advantages in multi-disciplinary classic management consulting, so that credit management has a broader vision in this subdivision, ensuring the advanced and comprehensive nature of credit management. Zhenglui Cheng's professionalism The consultant will consider the credit management risks and returns of the enterprise from multiple perspectives to ensure that the maximum degree of return is obtained on the basis of effective risk management;

2. Landing is strong and executable. Zhengming Mingcheng has long-term experience in receivables risk management, has a bottom-up credit risk management practice test basis, and involves the transformation and changes of various business departments and positions. The implementation and enforceability have become the success of project judgment. The key, Zheng Mingmingcheng has accumulated rich experience in the implementation and implementation of credit management;

3 Outstanding indicators. The project of Zhengmingming's honesty management will help companies achieve quantification of indicators and performance improvement in terms of cost management of credit sales, improvement of decision-making speed, shortening of DSO, reduction of overdue and bad debt rates, and increase of operating cash flow;

4 A team of experienced experts. Zhenglui Mingcheng's professional consultants have graduated from well-known universities at home and abroad, and have deep research on corporate credit management. At the same time, the unique industry expert group has rich practical experience in various industries, which will surely bring corporate credit management. To optimize in all directions;

5. Zhenglui Mingcheng has the successful experience of credit management consulting in many domestic companies, which will help us better provide services to enterprises and meet their upgrading needs.