Assess creditworthiness risk

As pay-per-service models aim to expand the market by eliminating upfront investments, they may result in more customers with lower creditworthiness. Both financiers and suppliers should conduct a customer credit assessment and bankruptcy means test prior to contractual agreement.

Although these assessments are conventional for many loans, understanding the nuanced risk in a circular business model scenario may uncover important details. Potential mitigation strategies include a security deposit, client and project diversification and changes to the cost of capital.