How to know if your customer is struggling?

5 April 2024 Posted by: Jace Hoeberigs Business Resources

All Kiwis – and Kiwi businesses – go through good times and bad times. With the recent cost of living crisis, more consumers and businesses are struggling with their repayments.
Late payments will be the first sign that something isn’t right for a customer. If a business is struggling to pay suppliers, or a consumer can’t meet one of their regular expenses, it’s a strong indication that they may be in financial strife.

Even if they make repayments to your business on time, they may be behind on other repayments. A quick credit check can confirm if their payment behaviour has changed since the last time you checked. Regular credit checking is a good way to know if an individual or business is starting to slip on their repayments. Alert Monitoring notifies you when a customer’s credit position changes. You set the alert criteria and you’re only charged when alerts are triggered. This can help you to know ahead of time when your customers are starting to struggle.

There are a couple of other key pieces of information on a customer’s credit report to pay close attention to. All credit reports feature a credit score – the higher the score, the more likely you will get paid. Changes in credit scores are a telling sign of financial health – we recommend you keep a note of your customer’s credit score so you can assess how it’s trending every quarter.

The other key indicator is the number of credit enquiries the customer has recorded in their credit report. Customers looking to borrow additional credit will have more credit enquiries, as lenders run credit checks to assess their risk. Look at the timing and frequency of credit enquiries too – a lot of enquiries over a short period may indicate a customer is struggling and in urgent need of cash.

If you identify a customer who may be struggling, open and honest communication with your customers is the best way to address the situation – and will help you come to an arrangement for them to pay you what you are owed.

For more helpful information on a range of topics to assist your business, the Centrix website has a wealth of resources available. Some of these might be of help to your customers also, so please feel free to reference them in your customer communications.