Credit Risk Needs Clear Governance

When the economy slows down, pressure travels quickly through the business ecosystem. Companies that expanded aggressively during growth cycles suddenly face tighter margins, slower demand and heavier debt burdens.

But looking at this only as an entrepreneurship story misses something important.

For many suppliers, this is also a credit risk story.

Early in my career I spent more than a decade in credit management. One lesson stayed with me: a sale isn’t finished until the cash is in the ban𝗸.

Even good clients can fail. Even strong brands can restructure. And when that happens, suppliers suddenly discover how much risk they were actually carrying.

From a risk management professional perspective, this is uncomfortable but simple: growth often pushes companies to extend more trade credit than they can truly handle.

A few lessons that experience taught me:

▪️ Credit risk needs a clear strategy and governance, not ad-hoc decisions.

▪️ Sales and credit must work together, but credit should never report to sales.

▪️ Trust your clients, but keep a professional dose of skepticism.

▪️ And sometimes the hardest decision is the healthiest one: not selling.

Because in business, when something looks too good to be true, it usually is.