Red Flag Alert insights give our users advance warning of risk in their customer or supplier base. A data-driven approach can more accurately predict when things might go wrong, as well as help find solutions.
Red Flag Alert’s scoring system turns complex risk modelling predictions into an easy to use financial profile of every UK business.
You can’t shield your business entirely from financial risk, but the right analytics will help you spot the early warning signs. Here’s six ways that Red Flag Alert can protect your business.
1 - Financial scoring that predicts insolvency
Credit Reference Agencies drive their scoring decisions through historical data, though these have limitations in predicting future performance. Red Flag Alert powers its predictive algorithm using vast datasets to spot the signals of future financial distress.
The graded scoring method predicts the probability of insolvency. This information will help you address these problems quickly before money owed to you must be writ ten off.
2 - Real-time monitoring
Annual accounts provide a financial picture that is up to 21 months old, so uncovering concerns can be difficult using financial data alone. The red flag system identifies risks early giving you plenty of time to tackle the problem.
For example, poor cash flow management is a major reason why businesses fail. Movements in key ratios showing financial deterioration provide a more accurate view of a business’ financial health, with the data points updated daily.
3 - Detailed financial health ratings
Key risk indicators go beyond the numbers, and Red Flag Alert uncovers trends by analysing all available information in a weighted risk approach.
The nature of a previous CCJ can be more insightful than its value. If a company is exposed to a debt, the size is less relevant than the size relative to net worth.
4 - Unique expert insight
The scoring system updates with new information every day, giving an immediate view of the situation before it gets worse. Taking the right action early will limit any potential loss.
‘Risky’ businesses might look more favourable in the shorter term with strict credit limits, but this is difficult to calculate. Data from Red Flag Alert could indicate what these terms should look like and turn a potential decline into a more profitable counter-offer.
5 - Drive more accurate decisions
Deeper customer insights can vastly improve your credit model. Forecasting future trends can reduce financial risk much more than relying on historical data alone.
You might also have been reluctant to offer credit in the past, unable to make informed decisions through lack of information or data ‘blind spots’. Enriched data sources create new sales opportunities while simultaneously enhancing your risk approach.
6 - Enhanced due diligence in your sales process
Red Flag Alert integrates into existing systems and gives sales teams the tools for practical risk assessment and appropriate due diligence. You can use it to automate the eligibility process by setting risk-based credit limits or filtering customer segments such as by industry or turnover.
This saves credit teams from wasting time chasing down leads that aren’t going to pass credit checks.
Red Flag Alert provides real-time financial monitoring that lets you know when clients could be in trouble before they are.
Find out more about Red Flag Alert on their member profile page here