A credit recommendation is an assessment of whether a customer - private individual or company - should be granted credit, and if so, how much and on what terms. The recommendation is based on an analysis of the customer's finances and aims to reduce the risk of loss when granting credit.
Unlike the "yes or no to credit" of the past, modern credit recommendations are based on much more detailed data and can also provide guidance on credit limits and maturities.
Why use credit recommendations?
When your business extends credit, you're also taking on a risk - that the customer will not repay. A credit recommendation helps you make a more informed decision and ensure that credit is only granted to customers with sufficient ability and willingness to pay.
The benefits of using credit recommendations:
- Reduced risk of loss
- Better customer segmentation
- More accurate credit terms
- Supporting a consistent credit policy
Even customers without registered payment remarks can be risky if they have high debt or unstable earnings. Therefore, a recommendation should always be based on multiple data points.
What is a credit recommendation based on?
A modern credit recommendation draws on a broad data set that can include:
- Debt registrations and payment remarks
- Public accounts and financial ratios
- Tax information and earned income
- Historisk betalingsadfærd
- Monitoring data and changes in economic conditions
The more up-to-date and detailed the data is, the more accurate the credit recommendation will be.
When should you get a credit recommendation?
A credit recommendation should typically be obtained in the following situations:
- Before granting credit, financing or installment plan
- When creating a new customer relationship
- When renegotiating payment terms
- As part of ongoing credit monitoring
Financial conditions can change quickly - so it rarely makes sense to make just one assessment. With continuously updated credit recommendations, you can react in time and adjust terms as needed.
More than just "yes or no"
In the past, credit recommendations were often binary: approved or denied. Today, you typically get more nuanced answers like:
- Recommended credit limit
- Recommended credit period
- Risk assessment by scale or color code
- Comments on special conditions or fluctuations in data
This insight gives you a stronger decision-making basis when choosing whether - and how - to enter into a financial relationship with a customer.
Get credit recommendations with Qatchr
Qatchr is a data-driven platform that gives you access to detailed credit information and tailored credit recommendations - for both individuals and businesses. Among other things, you can:
- Evaluate credit amount and maturity based on customer data
- Obtain information from debt registers and public sources
- Set up monitoring and receive notifications of changes
- Work consistently with credit policy and risk management
With Qatchr, you get much more than just a post - you get insights that can be integrated directly into your business decisions.
