Debtor assessment

Every day, thousands of debtor assessments are carried out, which is, as the word suggests, an assessment of a debtor - and their financial circumstances, including whether the debtor is registered in a debt register, such as the Debtor List or RKI.

Here at Collectia, we have many years of experience with debt collection - and not least helping with debtor assessments. In fact, here at Collectia we have developed our own platform for debtor assessments, called Qatchr.

In the following article, we focus on the concept of debtor valuation - and everything you as a creditor should know about it.

Why do a debtor assessment?

If a company grants credit, offers installment plans or otherwise offers financing to its customers - these forms of credit will, all other things being equal, entail a risk. The risk is that the creditor risks that all or part of the amount is not paid back - and thus a risk that the creditor loses money on the relationship with the debtor.

However, there are many ways to minimize your risk - and a good way is to conduct debtor assessments.

What does a debtor assessment include?

There are basically no rules for what a debtor assessment should or must contain - it is basically up to the company itself to define what information we want to collect and process about its customers - just that it is collected, stored and processed within the legal framework.

But a classic debtor assessment, which many still use, consists of looking up a customer in a debt register - such as the Debtor List or RKI.

These debt registers will tell you if the customer is registered with unpaid debts with other companies - if they have chosen to report the debt to the debt register.

However, this is not a particularly advanced and in-depth debtor assessment - but is often good for giving an indication of the customer's debt situation.

Fortunately, there are many other ways to supplement your debtor assessments today - including using public accounting figures, obtaining information about the debtor's assets and debts (real estate, car, etc.)

Many larger companies and lenders will often also have greater internal requirements for a debtor assessment - where a potential advisor or salesperson must fill in a wide range of information about the customer - in addition to what they can look up in e.g. RKI or the Debitor List. This could be information obtained from SKAT, debt conditions, etc.

How do you do a debtor assessment?

Fortunately, there are many good and easy ways to carry out a debtor assessment today.

Either the company can ask the customer for the information it wants, look up the information in public registers or use a system such as Qatchr - to do the debtor assessment for you.

Of course, it is also possible to use a combination of the above.

It often only requires the company's full name and or CVR number - while a debtor assessment of a private individual often only requires a CPR number or full name and address.

When should you perform a debtor assessment?

Basically, all companies that provide credit or any other form of financing to their customers should perform debtor assessments if they want to minimize losses on debtors.

However, many companies have set up internal rules for the area - and thus we often see that many perform debtor assessments when the customer relationship is established - but also many companies that perform ongoing checks - or even every time the customer shops with us.

It should be up to the company to find an appropriate level for the frequency of debtor assessments - however, as a debt collection company we can advise that they are carried out as often as possible - so that any changes in the customer's financial circumstances are also captured, which they are not, for example, if the debtor assessment is only carried out when the customer relationship is established.