Recent developments in the credit markets have underscored the importance of robust risk management and data transparency. The First Brands situation, which resulted in losses for numerous funders due to double-pledged or fabricated receivables, has become a clear example of why thorough due diligence matters.
GSCF’s Approach: Spotting Red Flags Early
Over the past five years, GSCF was approached multiple times to participate in First Brands’ accounts receivable programs. Each time, our team of working capital, credit and risk experts – in addition to our Connected Capital platform and risk protocols – identified several high-level concerns, such as gaps in transparency, complexity in funder involvement and other risk factors. These red flags prompted us to pass on every opportunity, ensuring that GSCF maintained zero exposure to First Brands.
How GSCF Helps Expand Risk Coverage
- Proactive Risk Management: Our platform alongside our Credit and Capital Markets teams flag issues early, allowing us to avoid opportunities that don’t meet our standards – protecting our clients and partners from unnecessary risk.
- Mitigate Counterparty Risk: Integrated credit and risk management tools help monitor buyer and supplier performance and give our corporate and bank partners the confidence to respond to early warning signals.
- Scale Globally with Confidence: For those managing global working capital programs, we can provide the data transparency and localized legal, regulatory and credit frameworks tailored to each market.
While other funders are now managing the fallout from First Brands, GSCF’s proactive approach and commitment to transparency have kept our clients safe. We continue to lead the way in risk management, setting a new standard for accountability and data-driven decision making.
The First Brands case highlights why data transparency and rigorous due diligence are essential in today’s credit market. With the combination of GSCF’s risk management experts and Connected Capital platform, our clients benefit from an ecosystem designed to prevent issues before they arise, ensuring confidence and security in every transaction.
Best Practices for Navigating Today’s Credit Climate
- Prioritize Data Transparency: Insist on direct access to transaction-level data and historical payment records. Transparency is the foundation of effective risk management.
- Strengthen Due Diligence: Go beyond surface-level checks. Regularly review collateral, validate receivables and ensure there are no double pledges.
- Monitor Counterparty Performance: Use integrated tools to track buyer and supplier behavior and respond quickly to early warning signals.
- Diversify Funding Sources: Avoid over-reliance on a single funder or platform to reduce concentration risk. While diversification is important, ensure all parties are aligned on transparency and controls.
If you’d like our team of working capital experts to conduct a proactive risk assessment of your working capital portfolio, reach out to us today. We’re here to help you navigate uncertainty and strengthen your risk controls with the power of data transparency.