Building a network of creditworthy partners​

In today’s volatile global business environment, companies are looking for greater certainty.  

Faced with an array of challenges – material shortages, an energy crisis, digitalisation, skills shortages, inflationary pressures, and more – businesses need to know they can count on their key commercial partnerships. More than ever, they want suppliers who can reliably fulfil orders and customers who can meet their payment obligations, no matter where they are in the world.  

To achieve that, businesses need access to highly accurate and up-to-date insight into the creditworthiness of those partners, both existing and new. But such high-quality information is surprisingly hard to come by.

“Few companies have very good visibility into the creditworthiness of their customers and suppliers,” observes Michael Wachtelschneider, a Key Account Manager for Allianz Trade. “That has become even more challenging with the globalisation of business relationships and the increasingly complex interdependencies between companies. Many businesses with large customer and supplier portfolios – some reaching into the tens of thousands – find it is difficult to keep track of those partners’ credit statuses.”

The situation is even more challenging when, as in the current economic climate, many companies are under pressure to de-risk their customer bases and diversify their supply chains.

Take two real-life scenarios. A company making high-value manufacturing equipment wants to expand into a new territory, but it doesn’t have a clear picture of the financial stability of the export country’s customers. The CFO knows that taking a flow of orders from these new customers could result in a series of bad debts, especially as the country is dealing with economic challenges; on the other hand, the sales team is geared up for this major opportunity.  

At the same time, the company needs to address a supplier challenge. Its products depend on the use of third-party microcontrollers and it is conscious that a potential trade restriction might interrupt supplies from its longstanding semiconductor partner. It needs to identify alternative suppliers who are robust enough to fulfil its business requirements yet have less exposure to trade barriers – now and into the future.

In both situations, the critical need is for a clear picture of the creditworthiness of those new commercial partners.

With the goal of bringing confidence to such decisions, Allianz Trade offers a global service that provides accurate and up-to-date visibility into the credit statuses of more than 83+ million companies worldwide. Grade Check draws directly on the same vast information database that we use within our trade credit insurance business to determine the insurance cover for customer policies around the globe. The proposition: if our business is counting on it, yours can too.

As that underscores, the picture formed of any company is both up to date and highly accurate. But it also needs to be easily accessible to customers.

“When checking hundreds or even thousands of companies, CFOs, procurement and risk management teams certainly don’t have the time to take on board an in-depth report before making a decision on who is creditworthy,” says Wachtelschneider.

Grade Check distils Allianz Trade’s wealth of information into an easy-to-grasp rating on a scale of 1 to 10 for each company, indicating its likelihood of defaulting in the coming 12 months, with a score of 1 representing a solid credit rating and 10 indicating insolvency. 

Key accounts also have the option to explore the details behind the rating with the help of our customer support team and get instant alerts when a grade on a supplier or customer changes (for the better or worse). 

“It’s effectively an early warning system that signals when partners might be getting into – or emerging from – difficulties,” says Wachtelschneider. “Customers really value the accuracy of the grade and the fact that it gives them an up-to-date view of business partners. That sets the service apart from standard credit rating agencies, which typically just base their ratings on the last historical financial statement.”

He also points to the global nature of Grade Check’s information. Not only does it cover 83 million companies, but its uniform rating enables customers to make valid comparisons between suppliers and customers from all different parts of the world.

It’s a service that has proved compelling for many customers. 

Grade Check can be accessed in two ways: through Allianz Trade’s online system or via an API (application programming interface). Some of our largest customers use the service to grade and monitor as many as 30,000 commercial partners; others use it in a more targeted way to check only their most valuable customers and suppliers. 

But companies are increasingly choosing to integrate the service directly into their business systems. Not only does it make handling checks and partner turnover easier, but it also allows companies to trigger customised business processes in reaction to a particular grade.