What is Trade Credit?
Mitigating trade credit risks early is key to growth
Trade credit, where a supplier allows a business customer to purchase goods or services on account and pay at a later date, is a common practice in many industries. It facilitates smoother business operations by enhancing cash flow for the buyer while potentially increasing sales for the supplier. However, this arrangement carries several risks for corporations, particularly those extending the credit.
The most direct risk is the possibility that the buyer will not fulfill their payment obligations. This could be due to financial distress, bankruptcy, or strategic default. Assessing the creditworthiness of customers is crucial but not foolproof. Changes in the buyer’s financial condition or broader economic downturns can swiftly alter risk profiles.
Mitigating these risks involves careful credit management practices, such as conducting thorough credit checks, setting clear credit terms, diversifying the customer base, and possibly using trade credit insurance. Understanding and managing these risks effectively is crucial for corporations to maintain healthy cash flows and long-term relationships with their customers.
Identify early signs of credit deterioration
Trade credit risk insights from the world’s largest company database
Our credit risk models are built on decades of global private company data from our bank consortium members, coupled with time-tested techniques to calculate credit risk from equity signals. Our models are validated over multiple credit cycles and informed by the world’s leading financial institutions who use them.
- 4 million defaults going back to 1973
- 190+ million detailed financial statements
- Accelerated credit insights for 450+ million pre-scored companies
- Coverage for small businesses on Main Street to global conglomerates
- In-depth spending trends and accounts payable data across major supply chains
- $2.5+ trillion in biennial B2B transactions from over 56 million business locations globally
- Key firmographic information, plus extensive corporate structure, ownership and parent/support details
- Macroeconomic insights and Climate & ESG risk metrics
Our early warning system turns data into action, enabling you to make better financial decisions
Staying ahead of potential credit risks and financial losses can be a daunting task. But what if you had access to an advanced platform with accurate global data and decision analytics built in?
- Pre-qualification and on-the-spot credit assessment
- Shorten the credit decision time with automated decisioning tools
- Uncover emerging risks and opportunities
- Rank and benchmark customers vs. 300,000+ peers
- Forecast performance across industries and regions
- Assign and adjust credit limits based on early warning signals
- Streamline collections with customer behavior and payment trends
Simplify credit risk monitoring
Game-changing automation and efficiencies – so you can protect your cash flows and customer relationships
EDF-X is scalable, easy to use, and has industry-leading coverage, so you can assess all of your customers with confidence. Now you can have peace of mind that no payment or financial threat is left undetected.
- Automated credit measures for any company in the world
- AI-driven models with payment data and alternative signals
- Color-coded alerts to flag credit risks in advance
- “What-If” tool for scenario analysis
- Comprehensive platform with no user inputs required
- Forward-looking view on payment delinquency
- Loss Given Delinquency
- Implied Credit Ratings
- API integration with your workflow and other Moody’s data
