Is New “Risk Trigger” A Threat To Small Businesses?

Andrew Clothier, Principal of IFA Regents Court Financial, has discovered that Credit Agency, Experian, have released a new monitoring system called “Risk Trigger.” It provides a flag to the customer’s Bank if they miss payments on a credit card or loan, with a different lender. Information can be supplied either about individuals or business clients on a daily, weekly, bi weekly or quarterly basis. Even though it is too early to tell how many of the Banks customers will be included, it adds fuel to the old adage that the Bank are happy to give you an umbrella when the sun is shining, but they ask for it back when it starts to rain.

Experian’s website sales message to their Bank customers reads, “This notification gives you the opportunity to make accurate, time critical decisions that may result in closing an account or setting up a payment plan.”

A small business under financial pressure will normally have a recovery plan, but they depend upon their bankers maintaining existing credit arrangements. If they are tight up against an overdraft limit, probably the worst thing that could happen is for the withdrawal of their overdraft facility.

There are plenty of firms and individuals, who experience cash flow problems, but by a variety of means; prudence, cutbacks, robbing Peter to pay Paul, etc., they scrape through with only slight evidence on their credit file that there has been a problem.

Often the family home is charged to the Bank and lean times can be nerve wracking, especially if there are no savings to fall back on.

If they do miss one, or perhaps two payments on a credit agreement, their business bankers will not previously have been aware unless it was their own overdraft or loan which slipped behind.

Andrew Clothier says, “With prospects for 2008 of increased bankruptcy, mortgage and loan arrears, etc., small businesses should be aware of the introduction of this scheme and ensure that they keep their credit file intact at all times.”

“We are alerting our business clients to the introduction of “Risk Triggers” and encourage them to talk to us as early as possible if they see financial hardships ahead.”

Published Monday January 28 2008 – Express & Star

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