Why and How to Evaluate the Creditworthiness of SMEs’ Business Partners

This article presents a method for developing internal ratings to best select among the business partners of a firm. It represents very complex goal which should be performed according to some proven managerial techniques. The author implemented the Analytic Hierarchy Process in which the problem is approached step by step. Managers and experts judgments are taken into consideration when structuring the problem. Since qualitative factors come into play, special attention is given to determining not only quantitative but also qualitative criteria. The process continues with the assessment of importance of group of criteria and sensitivity analysis. The applicability of this method especially in small and medium-sized firms is highly questionable.