In prior posts, we discussed how current tool used for collecting and assessing B2B information are sorely lacking and behind the times. Here, we will discuss how businesses fail to adequately understand and manage their risk and leave themselves open for harmful if not fatal failures. Understanding the risk profile of a company is vital, should be monitored continuously over time and consider all key components of a business’ value including customers, vendors and partners.
Broken Risk Management
Most businesses, especially small and medium companies, equate risk to the ability of a customer to pay, and, if a business performs a credit check at all, they usually perform it once, just before a engaging a company. This strategy is ok if the entire relationship only involves a single transaction but most B2B transactions are recurring in nature. Therefore, if you have a long term relationship with a customer, and are not monitoring their viability over the life of that relationship, you are leaving yourself vulnerable.
Business relationships should be viewed as a sort of life-cycle and not an event. The credit risk or viability of customers should be continuously monitored through the entire term of the relationship. The viability of any given company, varies over time and can be impacted by many things including their performance, business cycles and the political environment. Understanding the ebb and flow of a company’s business is key to understanding their viability. As the number of customers grows beyond a handful, this can be a difficult task. One of the key benefits of Trust Exchange's dashboard is that you can monitor these relationships over time giving a much clearer perspective of risk.
More Than Customers
Business risk presents itself in multiple ways beyond late paying customers and simply performing a credit check on a prospect before they become a customer is not an adequate way to mange risk. For instance, if a key supplier fails, they could impact the ability to deliver the end product. Equally devastating would be the failure of a key product partner or channel partner responsible for a large percentage of bookings or revenue. To measure risk, a deeper view into the workings of a company is necessary. Trust Exchange enables users to track the risk in their entire environment, view it as a portfolio and examine customers, vendors and partners independently.
At Trust Exchange, we feel that risk management is fundamentally broken but can be dramatically improved through monitoring all key relationships: Customers, Vendors and Partners.
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