Sufficient Bank Code but Limit Recommendation is Less

Created by Amy Sara Price, Modified on Wed, 10 Jun at 3:44 PM by Amy Sara Price

Trade Shield | Knowledge Centre LIMIT RECOMMENDATION FAQs

Sufficient Bank Code but Limit Recommendation is Less

? 3 min read 4 sections

You may encounter a scenario where an applicant's bank statements confirm they can afford the requested credit amount, but the Trade Shield limit recommendation is still lower than expected — or recommends Cash on Delivery (COD) terms entirely. This article explains why that happens, what it means, and what your options are.

In this article

1. The Bank Code vs. the Limit Recommendation	2. How the Risk Adjustment Model Works
3. What “High / Unknown Default Risk” Means	4. Your Options & Next Steps

The Bank Code vs. the Limit Recommendation

Trade Shield uses two separate assessments to arrive at a limit recommendation. These are independent signals — one does not override the other:

Assessment	What It Measures	What It Answers
Bank Code	Cash flow & affordability from bank statements	Can the applicant afford the repayment?
Risk Score	Likelihood of default or late payment (Default & Payment Risk)	Will the applicant actually pay on time?

ⓘ Key Insight: A sufficient bank code confirms the applicant has the money. It does not confirm they will choose to pay. The risk score addresses that second question.

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How the Risk Adjustment Model Works

Once affordability is confirmed, Trade Shield applies the Risk Adjustment Model to finalise the limit recommendation. The model evaluates:

Default Risk Score — the probability of the applicant defaulting or making late payments within the next 6–12 months
Payment Risk Score — the likelihood of irregular or poor payment behaviour based on behavioural and bureau data
High-Risk Criteria — a defined set of triggers (e.g. unknown risk profile, adverse bureau data) that automatically apply a conservative stance

When high-risk criteria are met, the model's standard output is to recommend no credit extension — regardless of what the bank statements show. This is an intentional safeguard, not a system error.

EXAMPLE — LIMIT RECOMMENDATION SUMMARY

app.fabricworkflows.com

Limit Recommendation ⚠ High Risk

Requested Amount

R 200,000

Recommended Limit

COD Terms

Bank Code

✓ Sufficient

Default Risk High

Payment Risk High

⚠ Based on the current risk profile, we recommend proceeding on Cash on Delivery (COD) terms. A re-assessment may be conducted in 6 months.

ⓘ Note: The bank code (green/sufficient) and the risk score are both correct — they are simply measuring different things. The combination of a sufficient bank code with a high risk score is the exact scenario this model is designed to flag.

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What “High / Unknown Default Risk” Means

A High Default Risk or Unknown Default Risk flag means that Trade Shield's models have identified a meaningful probability of one of the following occurring within the next 6–12 months:

Risk Flag	What It Indicates
High Default Risk	The applicant is likely to default or make significantly late payments based on bureau and behavioural data
Unknown Default Risk	Insufficient data exists to model the applicant's risk reliably — the absence of a track record is itself treated as a risk signal

In both cases, the Risk Adjustment Model applies a conservative stance: the potential cost of extending credit to a defaulting applicant outweighs the benefit of extending credit to an applicant who could afford it.

⚠ Important: This does not mean the applicant will default — it means the risk is elevated enough that the model cannot recommend credit extension in good conscience. The final decision always remains yours.

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Your Options & Next Steps

You have three paths available to you. Each carries different risk implications:

Follow the Recommendation: Proceed on COD Terms

Offer the applicant Cash on Delivery terms and schedule a formal re-assessment in 6 months. This is the lowest-risk path and aligns with Trade Shield's model output. Use this period to observe payment behaviour before extending credit.

Override: Approve at a Reduced Limit

If your relationship with the applicant or additional context gives you confidence, you may choose to approve a partial credit limit — lower than the R200,000 requested — as a managed entry point. This acknowledges the risk while allowing the relationship to develop under reduced exposure.

Override: Approve the Full Requested Amount

You may approve the full R200,000 if you are satisfied with the applicant's affordability and prepared to accept the elevated risk of default or delayed payment. The bank statements support the ability to repay — Trade Shield's risk model flags the willingness risk. Proceed with full awareness of both the Default Risk and Payment Risk scores on file.

ⓘ Approval remains your decision: Trade Shield provides a recommendation based on data and risk models. The approval or rejection of any credit application remains entirely within your discretion as the subscriber. Trade Shield's recommendation is advisory — it does not approve or decline applications on your behalf.

Need more help?

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