This is a guest post by Richard West, Chief Revenue Officer at Red Flag Alert.
When it comes to recovering money from an insolvency process, suppliers are at the bottom of the list of creditors. When UK-based construction company, Carillion went into administration in January 2018, hundreds of smaller building firms that relied on Carillion contracts also became insolvent.
Another example is the department store House of Fraser. At the time of its collapse, the company had almost £1 billion in debts, half of which it owed suppliers. As its administration wiped the company’s debts, the new owner had no obligation to pay suppliers.
Companies hit by the House of Fraser failure include luxury bag maker Mulberry, which had to write off £2.1 million in bad debts and assets, Pretty Green, which later fell into administration, and the advertising firm And Rising, which lost invoices worth £90,000.
In these insolvencies, and thousands like them, suppliers are taken by surprise—the first they learned about the prospect of an unpaid invoice was a letter from an insolvency practitioner.
In most cases, this is avoidable because struggling businesses show signs of distress well before they fail.
Spot risk with the Company Credit Checks and Zoho CRM integration
This integration connects Zoho CRM with Red Flag Alert's database that contains information about more than 6.5 million UK businesses. Each UK business is given a health rating that accurately predicts insolvency in the next 12 months. Users can use this extension to track UK clients and take action when health ratings worsen.
Companies with a gold rating are in great financial health. At the other end of the scale, a three red flag rating denotes a high risk. Of these companies with a three red flag rating, 56% will cease to trade within seven days.
Beyond the rating, customers can look into a company’s profile to get a detailed view of the financial situation.
In short, using Company Credit Checks for Zoho CRM will enable you to look down the road and see client insolvency before it occurs so you have time to take action and avoid falling into debt.
Find out more about the Company Credit Checks Zoho integration here.
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