Payment history

A payment history is an overview of a debtor's payments over a given period - for example, the past month or year.

An increasing number of online and subscription services now give their customers access to their payment history, where you can also view your invoices and maybe even see when the next payment is due.

Payment history has many purposes. For debtors, it provides an overview of invoices and payments, while for creditors it is a valuable tool - but one that many creditors don't make the most of.

Payment history for credit scoring and credit granting

In addition to being a convenient service for the debtor, the payment history is also an excellent tool for the creditor when granting credit, making credit assessments or creating an overview of a customer's payments.

Payment history gives an indication of the customer's ability and willingness to pay. It shows whether the customer pays invoices on time or if they consistently pay late. This can give a clear picture of customer reliability.

Payment history is therefore a useful tool for credit scoring. Does the customer always pay on time? Do they always pay late? And are large invoices paid as quickly as small ones? If you have a complete payment history of your customers, you should take it into consideration when making credit assessments or granting credit.

However, it's important to remember that payment history cannot stand alone. Late payments can have many explanations, but if a customer consistently pays late, it can give an indication of their financial stability.

Where do I find the payment history of my customers?

Most modern ERP systems can now show when an invoice has been posted and paid, but this requires that the posting of the payment is done close to the time of invoicing - and not just every 3 or 6 months, for example.

You can also find the payments in the company's online banking and compare them with the dates when the invoices should have been paid.

Payment history can't stand alone in a credit rating

We recommend that you use all the information you have about a customer - including payment history.

Payment history can help build a picture of a customer's willingness to pay, but it should not stand alone. An invoice can be paid late for many reasons - including reasons that may be the fault of the creditor, such as missing or late delivery. It's important to take these factors into account when assessing payment history.

In addition, payment history should be supplemented with debt register searches, asset and income assessment, and review of public accounts to obtain a complete credit rating.