It is no secret how frantic the situation has been for the last about 12 months, especially for the B2B world. When a wide range of companies found new opportunities, others have faced various difficulties and many were closed. Since March 2020, delays in B2B payments have escalated drastically, shooting up by 23% in the UK, 80% in Italy, 56% in France, 52% in Spain, 44% in Belgium, 26% in the Netherlands… this list goes on, and it is not just Europe. Asia and the Americas show a significant increase in the number of invoices unpaid by their due date as well.
But one cannot say that all these figures are influenced by the pandemic solely, nor directly. In many cases, improper due diligence of suppliers or other business partners, dreadful financial management, lack of an appropriate strategic plan of actions for the worst-case scenario and plenty of different reasons have played a crucial role in many a business’ activities. In today’s article, we would like to emphasize why you should scrutinise your current and potential business partners’ financial situation and to share the list of top business credit report providers of our own preference.
No matter how good your company’s financial management is, delayed payments from your clients will start to affect your own ability to pay in time to your suppliers along with that to make sound planning for the short and medium-term. Sustainable business relies on offering clients trade credits that they would be able to reimburse. The issue here is, of course, estimating which client can be trusted, and how to minimise your risks with other clients. A system that would assess and monitor the creditworthiness of your business partners thus proves to be crucial, especially with regard to the most susceptible ones to financial fluctuations and trade breakdowns. Not only do you have to guarantee your company will be able to avoid any financial and/or legal issues, but also make sure that you save time and resources you would otherwise spend chasing late payments.
The due diligence of your suppliers is just as important, because if you fail to understand which of your suppliers is striving to survive or to honour their part of the deal, you may end up with shortages, and hence risk to throw your own clients under the bus. Not only would you have to find a new source of materials or services to keep your activities running, in case one of your providers is out of business. You would also need a source that would have the capacity to deliver at least the same quality immediately. Depending on the industry you’re in, this may prove quite difficult, especially now. Therefore you should not rely on trust and find a way to follow and estimate both business stability and financial health of your partners.
A trustworthy practice to succeed in doing so is by applying to reliable business credit reports providers. It will be even more useful for you in case you have many suppliers, clients and other important stakeholders, as credit report providers oftentimes offer you the possibility to monitor a series of companies at the same time. The information provided helps you see not only the credit score itself but also what is bettering and what is hindering it. Moreover, a list of companies of your interest compiled with certain platforms should enable you to not just review their credit situations, but also get notified once some changes to their financial status take place. Thus you get the possibility to act in time, reacting before it is too late and alleviating risks.
Most business reports incorporate a financial assessment that sums up a business’ potential and profitability. These also highlight the critical points, if any, assisting you in making information-driven decisions. To achieve that, business credit report providers apply specific weighting frameworks and statistical methods, diving deep into financial data, company size and industry characteristics, regional specifics, corporate structure, county court judgements, mortgages or other relevant company intel. Besides offering recommended credit limits, credit report providers display a global risk score.
More useful info is given by trade payment information. Thus you can learn your business partners’ and prospects’ payment behaviour and understand how likely they are to make payments in certain periods of time. The displayed number of days that the company usually needs to cover their invoices would help you choose the most fast-paying prospects. Similarly, if you notice a slow-down in a current client’s ability to honour liabilities, you may rethink or renegotiate deliveries to that particular client so that your future financial situation would not suffer.
Global Database is a company intelligence platform offering a wide range of solutions and products to clients. Although previously most famous for their Sales&Marketing data, they now pride themselves in being a unified platform that can cover the needs of most corporate departments, including analytics, compliance, sales, marketing, financial and others - all under one single licence, thus becoming a truly global company database.
Global Database’s Business Credit Reporting solution features current and past credit scores and limits, payments, inquiries and mortgages lists, over five years of financial data, key performance indicators and ratios, county court judgements info and more for each of over 400 million companies in 190+ countries. For the US, corporate data also include UCC (liens), bankruptcies, and payment histories.
Not only has Global Database become the go-to B2B intelligence platform, but they are establishing their position as the unique directory that may cover all company intel needs and requirements. On top of that, the API they offer provides you with integration possibility with your own system or software to achieve automated lead scoring and/or onboarding processes.
G2 rating: 3.5
Experian is among the global leaders of consumer and business credit reporting. As some other bureaus on our top 5 list of business credit reporting providers, Experian collects credit data for companies and individuals alike. Priding themselves in being recorded on the UK’s FTSE Index, Experian gladly provide credit data to clients in over 100 countries. Among their main goals is to assist individuals in taking financial control and accessing financial services, support businesses by offering information to make data-driven decisions, ease the burden of responsibility for lenders, as well as hinder crime and fraud.
Experian features business credit third-party verified data for 99.9% of US companies (27M+ companies), which are continuously updated for their clients’ convenience. Among the featured data points are the Experian business credit score (including the Intelliscore Plus and Financial Stability Risk rating), corporate registration, credit trade payment info, public business records and key personnel. Thus, the critical information included displays business background info, company financial data, credit score and risk factors, banking, trade and collection history, liens, judgements and bankruptcies as well as other Uniform Commercial Code filings. Portfolio management, tax ID verification, commercial fraud authentication, portfolio monitoring, collections and recovery tools are other benefits you can get with Experian.
Dun & Bradstreet (further D&B) feature quite extensive business credit reports, first and foremost providing analytics and in-depth company data to help their clients assess the creditworthiness of the analysed entities. Besides trade payment history and operational intel, D&B presents a series of types of credit scores, ratings and other information - be it based on past performance or future estimations. For example, the D&B Viability Rating evaluates a business’ existing and expected financial health, expressly specifying the probability prediction of whether the company will go bankrupt, suspend its activity or go out of business in the nearest future. D&B Failure Score helps you to understand how likely a company is to go out of business without honouring its liabilities, seek legal relief from creditors, start a reorganisation process, and other events or procedures that may assist you in estimating credit risk.
More data points offered by D&B regard the possibility to neglect payment terms, past trade payment performance, liens and other public filings, lawsuits, judgements and more. According to their own website, D&B’s database comprises 330M business records with global coverage of 30,000+ data sources from over 200 countries.
G2 rating: 3.5
Equifax is a global data, analytics and technology company. Similarly to Experian, among a plethora of other solutions, Equifax provides their customers with both individual and corporate credit reports. The latter aims at delivering the most information to clients so that they could make informed business decisions. Equifax pride themselves in their unequalled focus on the critical small business segment.
The information provided may include company key firmographics, alternate business names, public records, credit summary, financial and trade payment history, 12-month and industry norm-based payment index, business credit risk score, Equifax Business Credit Risk Score™, Equifax Business Failure Score™, business and credit grantor comments, corporate relationships trees, guarantors and other stakeholders associated with the company.
G2 rating: -
Coface is an agile trade insurance group, well known for their credit insurance, risk management and global economy analyses and reports. They focus on offering solutions and services to guard and assist businesses across the world to make informed credit decisions as well as boost their ability to generate revenue on local and international markets alike. Business credit reports provided by Coface comprise corporate management info, key financials, payment history, Coface Credit Assessment (showcasing a score that reflects the possibility of the analysed company’s default within a period of 12 months from the day it was calculated), credit recommendations along with general corporate information. Data featured by Coface cover 145M businesses in the Americas and in Europe.
An important aspect of any business credit relies on the ability to secure financing. If you deal with companies that are not able to meet their business credit conditions, your company may end up having to face difficulties as well, your business cash flows affected by non-payment along with your ability to make payments in time and plan ahead. And if you have bad credit, you may not qualify for loans or other types of financing when your business will need them the most.
Managing business credit risk is crucial for appropriate lending decisions and for secured cash flows. Of course, it is quite impossible to avoid all business risks, yet you can minimise them. Identifying unreliable suppliers, clearly spotting immediate and future risks, saving resources on researching and, later on, chasing late payments are just a few examples where the value of corporate intelligence, financial data and risk management tools builds. The choice is always yours!