Payment behaviour

What if the payment behaviour in a credit report does not match your findings?

Sven Persoone

7 Mins
17/12/2024

In a GraydonCreditsafe credit report, you will find various scores, limits and indicators to complete the (financial) picture of a company. In addition to the credit limit, risk score and international score, you thus also have an indicator for payment behaviour and an extensive analysis of payment experiences. In practice, it sometimes happens that this indicator for payment behaviour and experiences differs from your own findings. Your customer may pay better/worse than what is reflected in the company report. What this could mean and how to deal with it, you can read in this blog article.

As a business information office, one of the things we do is accurately chart the payment behaviour of Belgian companies. Clients regularly ask us why their client's payment behaviour in a company report does not match their experience. There can be several reasons for this.

Indicator payment behaviour according to effectively paid invoices

The payment behaviour indicator shows the extent to which a company pays its invoices on time. It answers the question "How likely is it that I will be paid on time?". We calculate this based on the payment data companies have provided us with.

The figure you find in a credit report is ultimately the result of a weighting calculation applied to the payment experiences reported to GraydonCreditsafe by different suppliers. Recent experiences are weighted more heavily in this respect. All behaviours are reduced to a score between 0 and 10. The higher the score, the better.

Indicator payment behaviour

Does the company pay within the agreed period? Up to 30 days after due date? Up to 60 days? And so on. The indicator and charts in the payment experience section chart the extent to which agreed payment terms are respected or exceeded. And how the organisation in question scores compared to other players in the sector.

Payment behaviour analysis
Payment behaviour history
Payment behaviour history - graphic
Payment behaviour analysis - quartile analysis

And yet, it is possible that our findings differ from your personal experiences. One of the following two situations will then arise.

Situation 1. "Your customer DOES pay you correctly"

It is quite possible that your invoices are paid on time every time, but your customer still has a weak payment record in a credit report. So, what could this mean?

You may be an important supplier. If your customer does not pay you and the relationship falters, his day-to-day business could be jeopardised. For example, your construction crane is necessary for the construction contractor-customer. They do not want to risk that you, as a supplier, will come and take the crane back and he cannot finish his project. Therefore, the customer is willing to go the extra mile to maintain a good relationship. And then it is imperative that they pay you on time.

Or ...

You call hard enough, louder than the other suppliers. Companies with a good reminder procedure and short notice get paid faster. For instance, you might already send a reminder to remind the customer that the due date is approaching. Moreover, you may have debtors' managers who immediately call the customer and personally check why payment is not forthcoming.

Or ...

Your customer disputes invoices with other suppliers. The indicator payment behaviour can also be affected by disputes your client has with other suppliers. An exceptional situation that rarely affects the indicator negatively. If it is effectively a dispute, GraydonCreditsafe will already include a mention of it in the report.

Still, you can never be entirely confident if payment behaviour looks weak. If your customer has payment problems elsewhere, you could well be next. When the water is on their lips, things can suddenly move fast. As soon as a customer can no longer pay its main supplier, it runs out of operating funds. Bankruptcy is then not far away. This may come as a complete surprise to you when you have always been paid correctly.

Situation 2. "Customer does NOT pay you correctly"

In situation 2, we see the opposite. Your customer pays well elsewhere except with you. Your invoices systematically end up at the bottom of the pile and are apparently not a priority.

More than with your customer, it is best to start looking for the causes with yourself. Are you doing a good job yourself? Are you sending your invoices on time? To the right person and with the right address? Is your dunning procedure in place? Are you sending enough reminders? Are you making enough calls? Perhaps you are not tracking payments properly or taking too little (or too late) action to prompt your customer to pay.

Also confront your customer with the discrepancy between the recorded payment behaviour and the problem with your invoices. Chances are you will reach a solution in a very simple way. 

Want to check a company's payment behaviour against your findings?

Note: It goes without saying that no graphs and no indicator are available if no payment experiences have been delivered for the company concerned. Even though we get some 10 million experiences delivered every year from about 1,000 suppliers. However, you may decide to join our exchange programme yourself. To identify weak payments, but also to reward good payers. Interested? Then be sure to contact us.