When it comes to finding a business credit report provider, a business credit score is just the tip of the iceberg. The right business credit report provider isn’t just about making yes or no credit decisions on new customers: things go a lot deeper than that.
The right business credit report provider will:
- Give you in-depth data about the businesses you work with, not just a score and limit
- Show trends over time, not a snapshot that could quickly become outdated
- Allow you to monitor companies for changes so you can make smarter, faster business decisions
Our checklist is designed for credit managers, finance leaders and risk teams responsible for approving business credit, managing exposure and protecting cash flow. If you’re hoping to help your business make stronger, more reliable business decisions, you’ve come to the right place.
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1. Your business credit report provider should have information on a wide range of businesses
It’s great if you’re using a business credit report provider who can give you information about domestic companies. But if you search for that exciting new customer opportunity and get hit with zero results, will you have to give up altogether?
The right business credit report provider should:
- Source data from multiple sources
- Provide reliable data from places like government agencies, trade payment information and trade groups
- Have a wide enough database to make sure you can always find information about the business you’re looking for
If your business has an international footprint, you also need a business credit report provider that has reliable data across the world. Look for:
- An easy to understand, universal credit risk rating system so you aren’t comparing apples to oranges
- A provider with a wide international reach so you can get the answers you need
- Instant access to most international credit reports, to make fast, secure business decisions
- The ability to source fresh international reports, so your business is never left in the dark
2. Business credit reports should help you perform due diligence
One of the most important things to remember when you deal with international supply chains is that compliance is your responsibility at every level of your supply chain.
Even if you weren’t aware of any wrongdoing, a compliance violation at any point in your supply chain could hurt your business. Compliance violations could lead to:
- Hefty fines for your business
- Lofty legal fees if your business needs to defend itself in court
- Reputational damage that can lead to lost customers and revenue
OpenText’s research found that 88% of global consumers would choose to buy from companies with ethical sourcing structures in place over ones without. "Cancel culture” is about more than differing opinions: it’s an important decision factor amongst consumers that contributes to your bottom line.
And while it can seem like an impossible task to keep up with every link in your supply chain so closely, your business credit report provider should be able to help. When you pull a company’s business credit report, a good report provider should immediately alert you to:
- Compliance issues
- Sanctions
- Red flags like adverse media
- Legal filings against the business
That way, you can steer clear of the businesses that could pull you – and your reputation – down.
At scale, a good business credit report provider may also offer tools that integrate into your existing systems to protect from compliance threats.
3. A good business credit report provider should help prevent fraud
It’s no secret that b2b fraud is on the rise.
Recent research has shown that 80% of US organizations were targeted by payment fraud last year. The number the year previous? 65%. That points to a serious problem.
Payment fraud is one of the most common types of fraud businesses face every day. Criminals could:
- Send fraudulent invoices with slightly altered details
- Impersonate a stakeholder and demand payment be made directly to them
- Send duplicate invoices
The hope is always the same: that their targets don’t check details carefully enough before sending payment. Often, the people falling victim to payment fraud don’t have the information at hand to verify those payment details before they send that money.
Every single time (yes, every single time) payment is being sent, you need to verify:
- Addresses
- Phone numbers
- Banking information
- Business details like company name and the name of your contact person
And those details need to be confirmed before you:
- Sign contracts
- Send payments
- Action requests to change information from a business
That’s exactly what a good business credit report provider will do. If you know you can trust the information you see in a company’s business credit report, you can help your business stop fraud long before it becomes a more urgent issue.
4. Your business credit reports should help reduce risk across your business
When you check a company’s business credit report, your goal is always to reduce risk. You don’t want to sign a risky customer, start working with a risky supplier, or introduce risk to your cash flow, after all! So when it comes time to choose your business credit report provider, you should be looking for the reports that help reduce risk at all of those levels of your business and more.
Good business credit reports should tell you:
- How likely a business is to declare bankruptcy: A credit score, or risk score, is the best indication of how likely it is for the business you’re looking at to still be operating in a year. A business listed as high-risk should be looked at differently – or potentially even denied altogether.
- How quickly (or slowly!) a company pays its bills: A company’s Days Beyond Terms (DBT) tells you the average amount of days a company pays invoices past their due date. A DBT of 7, for example, tells you you should expect to wait an extra week to receive payment. A consistently high DBT, or one that fluctuates wildly, could point to liquidity issues
- The payment experiences other companies have had with the business: trade payment data is an eye-opener when it comes to choosing who to work with. Your business credit report provider should source real payment experiences from customers and suppliers businesses have worked with. The more information you can get on customers, the easier it is to weed out risky customers before you work with them.
- Whether a business has had any negative media coverage or legal filings against it: A business currently in legal trouble could be spending extra money on lawyer fees and fines. Plus, businesses being negatively portrayed in the media could bring your own company’s reputation down with them.
No more surprises when it comes to customer creditworthiness.
Enjoy a free trial of Creditsafe's business credit reports.
About the Author
Bill James, Director, Enterprise Sales, Creditsafe
With over 15 years of experience in finance, risk management and data analytics, Bill James brings a high level of expertise and industry trust to his role. Before joining Creditsafe in 2021, he served as Area Vice President at Dun & Bradstreet. Bill is widely recognized for his authoritative insights into enterprise risk strategies and is a frequent, trusted speaker at major industry events. His development of tools like the DSO calculator further demonstrates his applied experience and leadership in driving financial performance improvements.
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