The Blind Side of Business Risk

January 22, 2024

Most small and medium businesses manage credit from one angle: by running a cursory check on their prospective customers.

If businesses research credit or viability at all, it is one of the last steps in the sales process, just before or during contract negotiation. If acceptable, then the new customer is granted credit and the product or service is delivered.

What about their future viability? After they’re a customer for a year or more? What if you have a key vendor, critical to the delivery of your product or service? What if you have a key partner who contributes a large percentage of your revenue? How frequently do you check? Most businesses have multiple blind sides when it comes to managing risk.

For going concerns, credit risk should be re-framed as viability risk. You should check all of your key customers, prospects and vendors as the risk of a fatal failure may be higher with a key vendor than a prospective customer.

Wouldn’t it be nice to monitor the risk of your entire ecosystem?