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Professional Credit Risk Analysis and Canada and US Credit Risk Analysis Services
"Credit Risk Analysis measures the potential gain or loss (credit risk) in selling to a customer"

Credit Risk Analysis

Credit Process Advisors or CPA provides professional credit risk analysis services in Canada and the US. Credit risk analysis also includes customer analysis, which determines the probability of payment. Risk analysis services measure the potential gain or loss in selling to a customer. Credit risk analysis can be taught to staff, or contract credit process services, or outsource.

Credit analysis and credit screening services are a component of credit risk analysis and identifies a customer's risk for default. In the case of a customer with poor or marginal credit risk, default is more probable.

However, risk analysis must address other factors that affect the Client as a whole. The first factors in credit risk analysis are client industry terms, supply and demand, gross margins and competitive environment.

Credit Risk Analysis - Each Industry is different

Each industry has different credit terms and risk. The credit terms for the produce industry are 7 days, while the Steel industry is usually 30 days. Some industries use personal guarantees on a regular basis, while others don't.

Credit risk analysis must also factor in product supply and demand. Is the Client's product over stocked and the market flooded, or is their product in high demand and short supply? In the latter case, the risk tolerance is minimal. When the market is flooded, the necessity of credit risk analysis plays a larger role. If a client is sitting with warehouses of product, storage costs must be factored into the cost of the sale and credit risk.

Multiple factors in Credit Risk Analysis

Gross margins must also be factored into risk. Credit Risk Analysis must factor in the risk of open terms over a period of time. The profit margin determines when the breakeven point of selling to a customer with questionable credit will be reached and what limit to assign. As each month passes and terms are maintained, the risk factor decreases. Once the customer hits the breakeven point, the Client will still be ahead, even if the customer defaults on the line of credit.

Credit risk analysis is a deep subject and beyond the scope of a web page. CPA risk analysis consultants can guide you through the mine field of credit risk analysis. Contact us by phone, email or request a free Credit Risk Analysis consultation. Find out how credit risk analysis can increase your revenues.
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