What is default risk in retail stores?

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Do you know what default risk is in retail stores? Read the full article this week on Meu Crediário to learn more about this subject.

Default risk is a constant concern for retail stores as it can significantly impact their operations and financial results.

This risk refers to the possibility of customers not fulfilling their payment obligations, failing to pay off debts or purchase installments.

Continuing from the last article, in which we talked about how to open a credit account in high-risk areas , in this one we will address what to do with the information we collect during the initial period of the credit account.

So, as I promised in the previous article, I want to explain in detail the reason for the six-month trial period.

So, to understand more about the topic, check out the full article where we will show you even more ways to keep your operation healthy and without defaults.

Happy reading!

SIX MONTH TRIAL:
As I already introduced in the previous article , the six-month test period is what I consider the most appropriate to have even more precise information about default behavior and also about the volume of customer data.

Keep in mind that, especially during this period, we don't just want to see defaults, but also revenue, number of customers, repurchase percentage, average ticket, sales per service, average installment and, of course, defaults.

If we look at one or two months, this information may (and will) be distorted, as there is little data and any point outside the curve may seem like an 80 or an 8. In other words, a tragedy or even a success.

To improve your knowledge on the subject, watch the video below and learn everything about how to control default and when this rate becomes a risk for the store!
YouTube video
BUT HOW TO READ THE DEFAULT?
Once you've done the right tests, it's time to figure out how to read the numbers.
What is default risk? When is it high? When is it low? All this without beating around the bush.

If you are starting your credit operation from scratch and the 60-day default is in the following items:

1. LESS THAN 10%:
You have a golden nugget to mine. Over time, this default rate will overseas chinese in usa data decrease, as the traditional customer portfolio should have lower default rates (that is, if you don't lose your touch in credit analysis).

With this index you can start exploring the C risk profile (as explained in the first article).

Additionally, you can also consider increasing the limit and increasing the installment plan a little more. Don't do it all at once. If you choose to sell to profile C and increase the limit, wait until six months to increase the installment plan. Read the default rate of these changes and follow the process of "opening the tap little by little". This way, the operation will always be positive and promising.


2. BETWEEN 11% AND 15%:
You need to check where you are going wrong when granting credit. The operation is not bad, but it requires more care.

I can't give you a firm recommendation here, but in this case, I would suggest waiting another six months to make a decision about whether to open or close more credit.

At this point, it is important to know where you are going wrong and which customer is failing to pay.

There is probably some kind of information that can help you: Bad credit customers? Acquaintances? High sales figures? You need to explore it.