Top Service News
Unseen factors that can affect your credit limit.
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Director Resignations – When a director resigns, it can present challenges such as knowledge loss and transitional risks.Changes in leadership can sometimes result in alterations to credit limits, impacting the financial stability of the business. It’s essential to consider the history and background of the departing director. Warning signs may arise if the individual has been associated with companies that have faced insolvencies or financial difficulties in the past, indicating a potential risk factor for the current business.
Group Company Activity – If a company is part of a group structure, its credit limit may be influenced by the financial performance and credit worthiness of other entities within the same group.If one group experiences financial difficulty, it could negatively impact the creditworthiness of the entire group, resulting in a reduction to credit limits for all group members.
Rate of Insolvency within a specific Industry – The industry a company operates in can impact its creditworthiness. If a company is in an industry with a high rate of insolvency, credit reference agencies may view that industry as riskier, potentially leading to tighter credit limits. Overall, while the industry’s rate of insolvency can influence a company’s credit score and credit limit, it is just one of many factors considered by creditors when assessing credit risk.
