IMPORTANCE OF BUSINESS CREDIT REPORT DURING COVID-19
The economic effects of the COVID-19 pandemic will be felt in Latin America, the United States, as well as Europe; however, there are still ways to cover yourself and stay active in commercial negotiations.
The projection of the company Allianz Research is that the global insolvency index of companies will reach a record increase of 35% between the end of this 2020 and the first half of the coming 2021.
The use and benefits of Business Credit Report and commercial insurances during COVID-19 is even greater than any other time. These two combined tools can help the companies, of any economic sector and anywhere in the world, to mitigate commercial risk and, in particular, to reduce the gap of mistrust that opens between commercial partners.
At Credit Report we want to help the companies to understand the context of the new coronavirus pandemic and, above all, give them answers to the main questions that arise among those companies that are not very familiar with these tools such as Business Credit Reports and commercial insurance.
What factors are key when it comes to understanding defaults amid COVID-19?
Allianz Research identifies three factors that need to be addressed in any Business Credit Report from a business partner in this pandemic context.
- Impact of the confinement measures
The threats of a total confinement that once again paralyzes the global economy is an element that cannot be completely ruled out, before a vaccine against the new coronavirus appears. The policy imposed by each country can vary significantly, the risk associated to a certain company. For instance, Israel just now in September became the first country to again opt for total confinement for three weeks, after an economic reopening. - State interventions to preserve liquidity
Government aid with tax flexibilities or delays, state loans, direct subsidies or extended debt moratoriums are measures that can help preserve the liquidity of companies. - Economic sectors
The economic impact of COVID-19 is not the same in each sector. The pharmaceutical companies and all those engaged in technology services have a greater economic dynamism in the midst of the harsh conditions of the pandemic and that makes them more resistant to any global default shock.
In contrast, other sectors such as hotels, restaurants, the automotive industry and the sale of non-essential goods retail are more fragile when it comes to cushioning the effects of defaults.
Which are the direct benefits of having a credit report?
Credit ratings and commercial insurance were considered during long time a cost of doing business, especially within companies in the United States, but now are the best tools to deal with the context of COVID-19.
Interpreting the global economic context in detail and weighing the business partner are essential elements of a Business Credit Report because this allows:
Furthermore, these detailed commercial risk reports will help you choose the most suitable commercial insurance for each negotiation. This also translates into adequate protection for each company and represents, in many cases, financial savings.
At Credit Report we have 55 years’ experience in the market and offer commercial information from 190 countries. Our service is perfect for importing and exporting companies to continue doing business safely and securely, even in contexts as complicated as those of the COVID-19 pandemic.