Twelve Years of Zero Bad Debt amid Intensifying Credit Risks under COVID-19
The surge of COVID-19 in 2020 gravely impaired global economy and supply chain stability. As a result, factory shutdown and corporate bankruptcy increased at an alarming rate, driving up credit risks. FENC responded promptly in February 2020, therefore reducing the risk of bad debt, upholding the 12-year zero-bad-debt streak. Actions taken include:
- Compile weekly report on the latest credit risk exposure and customer operational status.
- Suspend the review of credit insurance, improving underwriting rate to 90% and expanding other channels for insurance.
- Shorten the grace period for accounts receivable, enhance overdue follow-ups and increase reporting frequency.
- Implement credit crunch in countries in countries with high COVID-19 infection rate and elevate the threshold for unsecured credit.
- Lower the credit limit for customers with low demand for unsecured credit to reduce risk exposure.
- Compile list of customers with long past dues to be monitored, and tighten or postpone credit transaction.