Many SMEs have a relatively small number of loyal customers with whom they have built a trusting relationship over many years. These customers are responsible for a significant portion of an SMEs revenue and are relied upon to provide a stable source of ongoing income for the business.

But what if one of these loyal, long-term customers was to experience significant financial distress and was forced to become insolvent without paying the monies you are owed? What impact would this have on your business?

There is no doubt that this situation would have a significant detrimental impact on an SME and in some cases it could be the trigger that leads to the devastation of a business.

It's no longer enough to check your customers at the outset of a credit relationship.

Even if you have taken the precaution of credit checking a customer before taking them on and you have built a solid relationship this situation could still happen to you!

Today's fast-paced business world is constantly changing and chances are so are the circumstances facing your oldest and dearest customers. Consider these stats:

• A business address changes every 15 seconds
• A new business is formed every 58 seconds
• A company fails every 3 minutes
• A share ownership changes every 6 minutes
• A business files for bankruptcy every 8 minutes

This is why it is no longer enough to credit check your customers at the outset of a credit relationship and to assume that their situation won't change. The value of credit application data decreases substantially over time. By the time your credit application information is just three months old its value is already deteriorating at a very significant rate - by the time your data is two years old its value is virtually non-existent.

What's more, the signs that would become evident to you that your customers may be headed to the wall are relatively limited. In most instances your only visibility of trouble would come from a slow down in orders or a blow out in payment days.

However there is a simple way for you to keep a close eye on your customers - behavioural monitoring which alerts you to changes in a customers profile as they occur.  This means potential issues will be brought to your attention immediately, enabling you to pre-empt any possible problems and re-adjust your rules appropriately to avoid detrimental impacts on your business.  Behavioural monitoring includes reviewing independently verified trade payment data and director behavior such as recent collections or court actions.

To find out more about monitoring your customers contact D&B Client Services on 13 23 33.