Solvency means having the potential to generate the necessary or sufficient resources to cover debts. The solvency study measures the payment capacity of the business to meet its short-term obligations. In addition, solvency indicates the current credit situation.
The analysis of a client's solvency allows us to know:
If the resources it has are sufficient to be able to cover debts up to a given amount.
The amount of working capital and its adequacy.
If the payment terms granted are related to those granted.
Whether the immediately realizable values are sufficient to cover the obligations due or what proportion they bear to each other.
Whether resources are wasted instead of being channeled to productive purposes.
"An excessively high solvency ratio, while increasing your client's liquidity, detracts from his means of productivity."
The Sales Glossary is a compendium of all the most commonly used terminology in sales strategy. Many of the concepts listed here are used when implementing a CRM system or a digital sales funnel, no matter if they are legacy systems or an online CRM. See also our blog that deals with sales techniques, marketing and sales culture.