How is the reputation of borrowers evaluated?

The reputation of business customers is an important part of credit risk assessment. I would like to share a brief story of a recent company’s risk evaluation and the July recovery results.

Too good to be true?

We received company’s application this week. The company’s income is growing, its activity is extremely profitable, and among its customers is a well-known shopping center and producer of canned goods. The company has almost no liabilities, there are no related companies either related to the shareholders and the company manager. Why did the company need a relatively small to company’s turnover loan of 50.000 Eur for working capital?

Using Google search, among the images we found a company logo with an almost identical name, the activity is also the same. The only difference is that the company is being restructured, owes social insurance and other creditors a six-figure sum and has some of its assets frozen. In our opinion, this is a phoenix company designed to transfer the liquidated company’s assets to a new company while avoiding debt repayment. We rejected the credit application.

Our July recovery results

Successful recoveries prior court decision

We actively work with late borrowers and if promises are not kept, we go to court. This month two late companies received a court notice and returned more than 32.000 Eur before the court decision was made.

Growing recovery from private borrowers

In July, we collected a third more from private borrowers than in June – 68.204 Eur (2.65% of all non-performing loans).

Solid business recoveries

In July, we collected 12.441 Eur (2.20% of all non-performing loans) from business loans.

I would be happy to discuss any observations or questions you have, you can reserve a time to talk with me by clicking here.


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