A credit monitoring system is a system for monitoring the credit of customers - businesses and individuals.
A credit monitoring system is used to monitor and track customers and their creditworthiness - this can be ongoing monitoring in debt registers, but it can also be information about whether the customer has moved, gone bankrupt or left the country. The company can then use this information in their overall credit rating of the customer.
What is the purpose of a credit monitoring system?
The purpose of a credit monitoring system is to continuously monitor all or part of your debtors/customers - to ensure that they have an acceptable credit rating.
If the customer's creditworthiness is not acceptable, according to the company's own policies, the company has the option to act accordingly - either by reducing overdraft facilities, reducing payment terms or requiring cash payment upon delivery of the goods.
Kreditovervågningssystemets formål er med andre ord at sikre, at virksomheden ikke handler med dårlige betalere – og dermed helt eller delvist at sikre sig mod tab på debitorer.
The credit monitoring system can thus greatly contribute to ensuring that the company does not have to send cases to debt collection, for example.
What is the difference between a credit score and a credit monitoring system?
Basically, there are no major differences - and the two are often referred to as two sides of the same coin.
A credit assessment is often something that is done once or several times - while credit monitoring is, as the name suggests, credit assessments that are done continuously in connection with monitoring and monitoring your customers.
In other words, the credit monitoring system is used to make credit assessments, whether once or many times.
However, good credit monitoring systems should also allow you as a company to receive information when a customer changes address, publishes accounts, changes in management, etc.
Many choose to use credit monitoring if you have an ongoing engagement with the customer - and thus an ongoing risk that the debtor will not pay their outstanding balance.
If you only have repeat customers - it can often be a good idea to focus solely on credit ratings when the debtor makes a purchase.
Choosing a credit monitoring system - Maybe Qatchr is for you?
Choosing a credit monitoring system can be difficult; what should it be able to do, should it be able to monitor both individuals and businesses - and will it make sense for your company to be able to get information on whether a debtor has changed address, gone bankrupt or similar?
We recommend that you search the market for a solution that suits you, but would like to offer you a free and non-binding review of our own credit monitoring system, Qatchr.
Qatchr is developed in close collaboration with the largest debt collection company in the Nordics, Collectia, and we know a lot about what information creates value in credit assessments of private customers, companies and organizations.
