Both companies and private individuals can get a payment remark, but what is it really? We asked the person we regard as Norway's leading expert on debt recovery and payment what you, as a credit manager, need to take into account when assessing businesses. After more than 20 years at Lindorff, in a range of key positions, Manager Strategic Projects Bjørn-Anton Knold has plenty of experience and clear answers.
How does a business get a payment remark?
For a business (not a sole proprietorship), a payment remark is reported 30 days after an external debt collector has sent a demand for payment, provided the claim is neither disputed nor paid in full at the time of reporting.
How many companies in Norway have a payment remark?
Around 85.000 businesses in Norway have one or more payment remarks.
There are around 362 000 limited companies (AS) in Norway today (02.08.2021). Source: Brønnøysundregistrene
Is it different in the other Nordic countries?
Norway is the only country where a debt collection case counts as a payment remark; the other Nordic countries go by the first legal step taken. Much the same as for private individuals and sole proprietorships in Norway, where it is legal action that triggers the reporting of a payment remark.
Are there variations between industries?
Yes, very clearly, from the best, which is banking and finance, to the worst, which is hotels and restaurants. Companies with a complex organizational structure (many locations or departments) are more likely to incur a remark than those with a simpler organization.
What are payment remarks used for?
Historically, a great many small credits were granted purely on whether payment remarks existed or not. Today, remarks are included as outcome variables, or as explanatory variables, in scoring solutions. A single remark does not in itself have to be a warning of rising default or bankruptcy risk, but a pattern of remarks moving from the less serious to the more serious is a clear sign of financial problems in the business.
Other facts about payment remarks
In many cases it is necessary for the economy that businesses and individuals can trade on credit. That makes it hard to avoid a certain share who cannot repay on the terms agreed.
Payment remarks are removed once they are paid, and while unpaid or partly paid they can be used for 3 years, so they do not mean that you carry a sign of poor ability to pay forever.
Debt collection companies are important players in gathering payment remarks, while the credit assessment companies are the ones that decide how heavily they should be weighted in a score or rating. Not just anyone can collect this type of information; it requires a license from Datatilsynet. There are also clear rules on the use and storage of the data.
Enin holds a license from Datatilsynet as a credit information provider and will use payment remarks for:
- Reporting remarks as a single data element, both when searching for a company and when monitoring a portfolio
- As part of a credit assessment model
- Statistics, to see trends and movements over time
Enin would like to thank Bjørn-Anton for sharing his knowledge and his time with us. Staying up to date matters to us, so feel free to contact us if you have questions about payment remarks.
