Payment Risk is the likelihood that a customer will pay you late or miss a scheduled payment. It focuses on how the customer currently trades with you — their behaviour, consistency, and ability to pay within your agreed terms.

This score is also used to calculate the Potential Credit Capacity (before risk adjustment) — the maximum amount a customer could reasonably spend with you based on their payment behaviour and available capacity across other suppliers.

What the model considers

Payment Risk Bands

ⓘ Note on New Customers: If a new customer has no prior Trade Shield payment history, the platform will show Payment Risk as Unknown and the recommendation will be based on Default Risk only. Once trading data builds up, Payment Risk will populate automatically.

Default Risk is the likelihood that a customer will fall into protracted or full default on a future payment. It takes a 6–12 month forward-looking view, assessing the customer's obligations across all suppliers — not just you.

This replaces the need for traditional trade references by providing a data-driven view of how the customer treats their entire credit footprint — not just their relationship with your business.

Key difference from Payment Risk: Default Risk considers the same model inputs as Payment Risk, with one important distinction — it focuses specifically on how the customer treats their obligations with all suppliers, whereas Payment Risk focuses on how they trade with you.

Default Risk Bands

ⓘ Blue-chip customers: Larger companies may show a higher Payment Risk not because of financial difficulty, but because of internal AP processing delays. Always consider the customer's invoice approval and treasury process before acting on the score alone.

Both scores appear side-by-side in the Risk Scores section of the Customer 360 view. Each panel shows the current band, when the score was last calculated, and a colour-coded scale so you can see where your customer sits at a glance.

ⓘ Tip: Scores are recalculated daily, but a limit recommendation only changes when triggered by a data event — such as a customer exceeding their limit, a change in payment behaviour, or a business status update.

Once both scores are produced, the Credit Strategy Matrix tells you how to respond — whether to Grow, Maintain, or Reduce your exposure to that customer.

ⓘ How to read this matrix: Find your customer's Payment Risk on the left (rows), then cross-reference with their Default Risk across the top (columns). The intersection tells you the recommended credit strategy.

Once the models produce a Payment Risk and Default Risk band, those scores are applied to the Risk Adjustment Framework (RAM). The order always matters: first the model tells you what the risk is — then the RAM tells you what to do about it.

Configuring the RAM for your credit strategy

The RAM can be configured differently depending on your credit appetite. Three models are available:

Two separate frameworks can run simultaneously — for example, a more aggressive framework for new buyers while keeping a conservative one for existing accounts. Contact your account manager to adjust.

ⓘ Tip: The audit trail in the Recommendation panel shows exactly how a limit was derived — which data sources were used, the risk bands applied, and the resulting percentage. Use this to explain a recommendation to a customer or internally.

You are never locked in to a system recommendation. Trade Shield gives you the tools to review, override, or act on a recommendation using the built-in workflows.

ⓘ Want to learn more? Watch the full training video Behind the Limit: How We Calculate Credit Risk for a walkthrough of the calculation process with live examples.