In a particularly challenging economic environment for companies, derived from inflation and its impact on costs, the impact of elections on investor confidence and the challenge involved in the adoption of new technologies, the identification of a high risk debtor has become imperative to guarantee the financial stability of companies.
High-risk debtors are individuals or entities that have a higher degree of non-compliance with their financial obligations. Its early identification is key to the company's growth, but in complex environments it becomes crucial.
We have detected that people between 40 years old and 60 years old, who live in Mexico City, State of Mexico, Sinaloa, Chihuahua and Jalisco are the ones who go into debt the most. Data from our company Coperva also indicates that Debtors tend to be mostly men and the range of their debt ranges from 800 pesos to 300,000 pesos; However, this varies depending on the sector where they incurred their debt.
4 tips to identify the high-risk debtor
Beyond this, companies must pay attention to several aspects when evaluating whether or not a debtor is high risk. According to Coperva, these are some of them:
1) Poor credit history
A negative credit history, including frequent late payments, unpaid loans, or previous bankruptcies, is an indicator of a high-risk debtor.
Analyzing the client's credit history allows us to have a detailed view of their behavior in terms of payments and financial obligations. Companies should closely examine any signs of non-compliance and late payments.
2) High levels of debt
High-risk debtors often have excessive levels of debt relative to their income, which increases the probability of default.
According to information from Coperva, at the end of 2023, banks were the sector that had the highest percentage of overdue loans with 34.02%, the financial sector had 23.12% and the departmental sector, 13.14 percent.
3) Financial fluctuations
Irregular income, lack of stability in the source of income or significant variations in the ability to pay are warning signs of a high-risk debtor.
In this case, I recommend carrying out a financial analysis that includes a review of financial statements and the ability to generate cash flow. This allows us to identify signs of financial risk and establish the real payment capacity.
4) Lack of transparency
The lack of transparency in the financial information provided, as well as the reluctance to share relevant details, may indicate the presence of financial risks.
Transparency in financial risk management is essential. Companies must establish clear policies and rigorous procedures to evaluate and monitor debtors. Transparency in communication and information disclosure contributes to more accurate evaluation and maintenance of healthy financial relationships.
Technology in search of the high-risk debtor
Implementing advanced technologies, predictive models, and data analysis algorithms can improve the accuracy and effectiveness of the assessment process.
The key to identifying a high-risk debtor lies in the adoption of advanced methodologies that consider not only traditional aspects of solvency, but also more complex factors such as past payment behavior and economic trends.
Alan Ramirez Flores Founder and CEO of Coperva, a leading firm in recovery of past due loans. It has various recognitions for innovating the industry in which it participates. Author of the book Leadership for Everyone. Lecturer.