At Hokodo, we extend credit terms to merchants, which creates a financial exposure for us. This exposure refers to the open and unpaid amounts that the merchant owes. If a merchant fails to meet their financial obligations, it poses a risk to us.
For instance, if a merchant delays payment, it impacts our cash flow and financial stability until the payment is made. Additionally, merchandise returns or disputes can create uncertainty and potential financial loss: the merchant has the returned merchandise and the cash from the sale, as Hokodo paid for it. To manage this exposure, we assess the merchant’s financial health, set credit limits, monitor transactions, and request updated financial information. These steps help us mitigate the financial threats posed by merchants who may default or delay payments, ensuring the financial protection of both parties involved.Sometimes, insufficient or outdated information about the merchant's financial health makes it challenging to accurately assess the risk and set appropriate credit limits. That's why Hokodo may request your financial information directly.
