Businesses more cautious about risk

Does the customer always come first? Not anymore, as the crisis and the slowing cash flow in the market have made the risk of bad loans even greater than that of having no customers. In other words, businesses in Greece today would rather lose a customer or turn one away if they think that they may not end up getting paid.

At the beginning of the crisis, the need for a more stringent assessment of existing or potential clients was first recognized by the banking sector, which reduced the number of new loans it issued by imposing stricter criteria.

Now, customer selection has spread to almost all other sectors. So, together with the credit that many businesses extend to their regular customers, such as by accepting postdated checks, they also issue a warning that if they do not pay up, they will no longer do business together.

This trend is confirmed by the Greek Association of Higher Credit Risk Managers, which notes that an increasing number of businesses are assigning customer selection to their financial or commercial departments, adding that there are also many companies commissioning private agencies to perform this service.

Customer selection tends to be more prolific when the client is an individual or a freelance professional, according to data. Even though there are not a lot of small businesses turning away clients, the fact that there are any at all is telling. Meanwhile, among larger businesses, the rate of clients being turned away has increased in the past year by up to 50 percent.

According to a special study conducted by the credit risk association in collaboration with ICAP, the criteria employed in customer assessment are no longer restricted to whether or not a client is on the credit blacklist of the Tiresias system, nor whether he or she has signed a check that has bounced. Now, businesses are looking at whether customers have any arrears with the tax office or even the land register, while marital status is also taken into consideration.