KYC 2.0: Know your customers so you are sure that you are doing business with the right partners
Of course, you do everything you can to make the right decisions within your company and to achieve the best possible results. But do the companies you work with do the same? And how do you know this? To be sure that you are doing business with the right companies, it is wise to request a credit report. But it's even smarter to top it up with a few data-driven information.
You are only able to make the best business decisions when you are aware of the most relevant and real-time (business) information. It is essential to be informed of the state of affairs within your own organisation, but also about the current situation of your customers, suppliers and prospects. Believing someone at face-value sounds nice, but it poses a huge risk to your business operations. Therefore, a credit check should certainly not be skipped. But is a standard credit check enough? We don't think so.
Beyond a regular credit report
It is much smarter to dive deeper into the due diligence process. To make sure that you do business with companies that are indeed in good financial shape, are reliable, run minimal financial risks and take the right decisions among other things. That's why there are solutions that go way beyond a regular credit report. This provides you with more in-depth insights, making your company compliant and protecting your organisation against negative external influences. You can finally focus on growing your business!
A 360° view
Up-to-date and real-time knowledge about the companies you do business with is essential because it's the only way to find out if they really are who they claim to be. Yet the Know Your Customer (KYC) process goes much further than just knowing who they are and what they do. It is just as important to also know who your customers are doing business with: this is your second-degree network, but keep in mind that this due diligence should also apply to your suppliers. Could they put your supply chain at risk by dealing or being connected to unsustainable businesses? Making well-founded decisions in the field of customer acceptance or suppliers added to your books is, therefore, only completely reliable with a 360° view.
Irregularities in sight
It is therefore important to obtain a fully transparent view of the current status of your (potential) customers and suppliers, their history, and the prospects. An overview of all irregularities can also show whether there are indications of fraud, for example, or any other problems that you would rather avoid dealing with. It is important here that the first- and second-degree connections of a company are screened for dozens of unusual situations and irregularities.
This gives you insights into extreme fluctuations in the company's financial figures, among other things, whether the grand totals on the credit and debit side of the balance sheet differ in the most recent annual accounts. However, it is not only finances that are a point of attention, but business operations are also just as important. Changes in management shortly after a change in company form, for example, or the takeover of bankrupt parts of another company are also crucial pieces of knowledge. All information that is not mentioned in the company brochure, but which is essential in the establishment or maintenance of a collaboration.
The impact of COVID-19
We are not telling you anything new when we say that the world has been turned upside down since the coronavirus crisis. Where you previously had full confidence in certain customers or suppliers, these have suddenly become much less stable or even got into serious trouble since the health crisis. With all the consequences it entails, for both the company in question and for your business. In addition, it may be even more difficult for new customers to get a clear picture of their business and prospects.
Due to the coronavirus crisis, another point of attention has been added in the past year. To what extent does COVID-19 affect your new and – at least as important – existing customers? You need insights into the consequences of the coronavirus crisis for the company in question.
Positive results in the picture
Of course, it is not nice to only have the risks in mind, but it useful to have insights into the positive results and changes too. If things are going well for a particular customer, that's also very useful to know.
Graydon Network incl. XSeptions goes beyond the information of a traditional credit report. It also keeps you informed of the changes in the (financial) situation of your relations. It also includes an extensive range of scores, including the Impact Score. In addition to the Graydon Network incl. XSeptions, the Monitoring Tool allows you to be informed of changes in real-time. You can receive weekly or daily updates about the changes in your customer portfolio, whichever you prefer. This way you will never be faced with surprises again.
Would you like to know more about Graydon Network incl. XSeptions or one of our other solutions for optimal credit management? Please contact us.