CAT / FIA FFM Syllabus F. Credit Management - External sources - Notes ^{4 / 4}

The main external sources that may be used to monitor accounts receivables:

1. Credit rating agencies

   A credit rating agency (CRA) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely interest payments and the likelihood of default.

   An agency may rate the creditworthiness of issuers of debt obligations, of debt instruments.

2. Industry sources

   There are many sources of industry data available on the Internet.

   These sources include free and fee-based information.

3. Financial reports

   Suppliers need Financial Statements to assess the credit worthiness of a business and ascertain whether to supply goods on credit.

   Suppliers need to know if they will be repaid.

   Terms of credit are set according to the assessment of their customers' financial health.

4. Press coverage

   Is a report about something in newspapers, and magazines and other media

5. Official publications

   Official publications are not limited to official journals.

   They also include documents from parliament, collections of legal texts (laws, decrees, treaties, etc.), and publications and administrative reports issued by executive authorities (the President, Ministers, etc.) or public bodies.

   Also included are statistics, local government publications, publications by the European Union and intergovernmental agencies (the United Nations, the World Bank, the IMF, the WTO, the Council of Europe, etc.)

6. Bank or supplier reference

   Information released by a bank about a customer, to another bank or lending institution.

Bank references generally include

1. number of years of a customer's relationship with the bank,

2. number of loans and the amounts of their balances,

3. type and quality of collateral(s) provided, and

4. a copy of the customer's latest statement of financial affairs on file with the bank.

Banks usually are under no obligation to seek the customer's approval (or to reveal the identity of the recipient) for releasing such information.