Your customer has always paid on time. Yet your latest invoices are taking longer to settle. Is this temporary, or is something else going on? Managing credit risk requires insight throughout the entire business relationship. Geopolitical tensions and supplier issues can also affect your cash flow. In this blog, we explore three developments in trade credit risk and what they mean for the way you assess and monitor customers and suppliers.
1. Bankruptcy risk requires more than an annual check
A company may appear financially healthy based on its latest annual accounts, while its liquidity is already under pressure. Rising costs, declining orders or the loss of a major customer can quickly change the situation.
Consider this example: a customer still pays your invoices within the agreed payment terms but is increasingly paying other suppliers late. Based solely on your own records, there may be little cause for concern. Payment experiences from across the market can then be a reason to investigate further. Is this an isolated delay, or is a broader pattern emerging?
By combining up-to-date business data, payment experiences and risk scores, you can investigate such changes earlier. This helps you assess whether your credit limits and payment terms still reflect the level of risk, even between scheduled reviews.
Interesting read: From fragmented partner data to a Risk Intelligence Hub in 4 steps
2. Geopolitical risks also affect local businesses
Geopolitical risks extend beyond the country in which a company is based. A Dutch or Belgian business may depend on components from Asia, foreign energy supplies or revenue from vulnerable markets. Conflicts and trade restrictions can therefore directly affect costs, delivery times and cash flow
Disruptions in the Middle East illustrate this clearly. In October, Reuters reported how higher freight and insurance costs, along with longer shipping routes, are making oil transportation more expensive. These costs can reduce margins further down the supply chain and put pressure on working capital.
This broadens the credit risk assessment: where are the company's economic dependencies? Consider key suppliers, sales markets and available alternatives. This approach applies to both customers and suppliers, moving from Know Your Customer and Know Your Supplier to Know Your Partner.
Interesting read: This way, organizations gain more control over international credit risk
3. Customer and supplier risks affect the same cash flow
For customers, credit risk comes down to one question: can and will they pay? For suppliers, the focus is on continuity: can they continue to deliver? Both affect your cash flow. If a critical supplier fails, you may be unable to produce, deliver and invoice your own customers.
At the end of September 2026, Ford reported that a supplier issue had disrupted F-150 production and would affect deliveries to dealers. Even after production resumed, the consequences continued to be felt.
When assessing suppliers, consider four factors:
- Criticality: how important is the supplier to your business operations?
- Dependency: to what extent do you rely on this supplier?
- Risk level: how likely is the supplier to experience financial difficulties or a supply disruption?
- Alternatives: how quickly and easily can you switch to another supplier?
Elevated financial risk may be manageable if alternatives are available. A supplier that is difficult to replace, on the other hand, deserves closer attention, even if its overall risk profile is average. This approach is also reflected in the EBA guidelines on third-party risk for financial institutions: the impact of a disruption partly determines how much attention an external party warrants. Tailor your monitoring to both the level of risk and its potential impact on your business operations.
What do these developments mean for your credit risk management?
Managing credit risk starts with understanding the financial health of your business partners. These three developments show that you also need to understand what is changing and how those changes could affect your organisation. Ask yourself three questions:
- Is this customer creditworthy?
- What changes involving a customer, supplier or supply chain partner could affect our cash flow?
- Do we need to make a different decision today than we did yesterday?
Complement periodic credit checks with ongoing monitoring, and assess signals based on both risk and impact. Establish in advance who is responsible for investigating a change and which actions may be appropriate, such as reviewing a credit limit, adjusting payment terms or looking for alternative suppliers. This clarifies when intervention is needed and who is responsible for taking action.
Managing credit risk with up-to-date data and monitoring
Changing financial conditions, geopolitical tensions and supplier dependencies can all affect your cash flow. Up-to-date business data and monitoring help you track these developments. Combined with clear agreements on follow-up actions, they enable you to determine when a different decision is needed.
Discuss with our experts how to align your risk management with the risks associated with customers, suppliers and supply chain partners, and which insights you need to do so.
