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In Focus Risk


The foodservice industry: methods of credit decisions


A diverse sector means that a wide range of information is required, including online sources


Sarah Swan-Smith Credit control manager, Pilgrim Foodservice sarah.swan-smith @pilgrimfoods.co.uk


We live in an age of computer-generated decision making, the days of seeing a person face to face, and good standing within the community being the ‘be all and end all’ of a credit decision has largely been left behind; whilst this has streamlined the process, it does pose further complications.


Diverse customer base Foodservice has a diverse customer base, from large corporate businesses to burger vans, event catering, and the restaurant sector. This diversity allows for a credit process that must take much more than the standard financial checks into account when deciding whether to offer credit. Over the years, I have seen the climate


shift from looking at credit-agency reports and standard trade-reference requests to decide an offer, to having to move with the world of online searching and social media. Social media is something that companies


either love or hate, or – more likely – use purely because they feel they will be left behind by their competitors if they do not get on board the media express. Financial reports are a great basis for


credit decisions. They allow an insight into the prospective customer’s accounting practises and can show the growth, or decline, of a business, but do they show the whole picture? Accounts are already at best nine months


old when we get to review them, and we all appreciate that a lot can happen in nine months. Wise companies will always have a holding company behind the scenes, where their greatest assets will be safely stored away, should the worse happen, of course.


42 www.CCRMagazine.co.uk


Wise companies will always have a holding company behind the scenes where their greatest assets will be safely stored away, should the worse happen, of course


Unstable accounts I have seen many credit checks for customers show unstable accounts, and, if this is a consistent decline, then alarm bells should be ringing in the back of your mind, but, for the average credit report, this should only be taken as part of the process, not as the whole gospel truth. Trade references are commonly used and


I will always request a selection from a prospective customer. A company can have a fantastic credit report, but, ultimately, have a very poor payment record. This alone can have a devastating effect on cashflow, especially in a climate of uncertainty that we currently reside in. On the flip side of the coin, a company


can have a very average credit rating, but have been trading for years, and will always pay on time. Internet searches are also a great tool for


anyone within credit management. You can usually find out the information that maybe the customer does not wish you to know. Within the foodservice industry, Trip


Advisor, Facebook, and Twitter can tell a thousand tales: are reviews becoming 5* or 2*, has the decline only happened in the last six months? If so, maybe ask the questions why are they moving supplier: better products or bad relations with their current supplier? Credit management, within the foodservice


industry, is now so much more than credit checks and references. You must now become a detective with your Sherlock Holmes deerstalker firmly on your head, trawling the internet for slices of information so that you always have a full pie on which to base your decision! CCR


November 2017


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