CreditVision for Business: Spot and prevent potential credit risks before liquidation is even on the cards
In today’s volatile economy, there is no room for risk. A strong credit risk management strategy is an absolute must for lenders, to help them minimise risks and maximise profits and productivity.
TransUnion’s CreditVision for Business* (CV4B) report enables lenders to spot credit risks by determining the likelihood of a business defaulting on a credit facility within 12 months of commencement.
Based on TransUnion’s extensive commercial database, the CV4B scorecard suite uses over 200 predictive characteristics to determine this probability.
CV4B helps lenders harness the power of alternative data sources and a multidimensional evaluation of risk to gain insight into how likely a business is to repay its debt.
CV4B: Easy, fast, accurate
pbVerify’s CV4B report outputs easy-to-understand data. It provides a three-digit company score and a three-digit principal score. The two scores are banded into seven easy-to-interpret overall risk bands ranging from C1 (the lowest risk companies) to C7 (highest risk companies).
The performance of a business’s directors has proven to be greatly predictive of its delinquency. CV4B analyses a prospective business customer and its principals to assign a score to each. These scores represent the risk associated with the commercial customer, as well as the risk associated with the principals.
These scores are statistically combined to give credit grantors the most accurate view of business risk. Overlaying company-specific data with principal or director data improves the scorecard performance by 25%: maximising predictive power and increasing accuracy.
The CV4B difference
While the speed, simplicity and accuracy of our CV4B reports is compelling in itself, the true power of CV4B lies in the fact that it provides an entirely holistic view of the delinquency risk associated with a business.
A business’s going concern is an important indicator of a sound debtor, it does not give lenders a complete view of the associated delinquency risk. It can take months for liquidation to take effect and the longer a business struggles, the more debt piles up and the harder it is to recoup money.
CV4B provides a transparent view of a business’s default risk by using its going concern status merely as an indicator and not the final outcome of the score. The default probability of a business is essential for loan appraisal and this information can be used to price, set limits and terms for each customer and ensure the safety of lenders’ money.
CV4B benefits
The ability to easily identify and evaluate both risky and profitable customers is a gamechanger for lenders in a highly competitive environment that holds more risks than ever before.
The benefits of CV4B include:
- The elimination of manual reviews: The manual review process is complex and time-consuming. Having good, accurate data dramatically reduces the need for manual reviews, and improves lenders’ portfolio risk management.
- Rein in credit risk exposure: CV4B enables lenders to keep credit risk exposure within acceptable limits.
- Customised offerings: Armed with CV4B report data, lenders can offer the right price and terms to customers on the back of determined risk levels.
- Hands-on risk management: CV4Bempowers lenders in the short term too, by enabling them to take action on existing customers who are showing signs of distress.
- Targeted marketing strategies: CV4B data gives companies in-depth insights into markets, allowing them to implement a marketing plan focused on growing sales within a specific group of consumers.
- Assess risk of existing portfolio for collection purposes: Existing portfolios are sometimes forgotten in the risk management process, with potential borrowers taking precedence. CV4B keeps all aspects of a company’s risks in view, so they can constantly keep their fingers on the pulse of their business.
Late payments and non-payment of loan commitments are becoming far too common for companies to take anything less than a uncompromising stance when it comes to risk evaluation and management.
Get in touch today to find out more about CV4B and pbVerify’s extensive suite of risk management tools. Email [email protected] or call +27 (0)10 823 5194.
* CV4B replaces TransUnion’s QV4B (Quick Vet for Business), which was a similar product launched in 2018 to give businesses an overview of a potential customers, without them having to go through the lengthy process of investigation and manual vetting.
REFERENCES
- pbVerify – pbVerify bolsters risk management portfolio
- TransUnion – CreditVision 4 Business
