How to Manage Credit Risk with Business Credit Reports

To ensure you are taking the right steps to protect your company against credit risk, you need to stay informed about the financial condition of the companies with which you do business. However, it can be time consuming and expensive to figure out what information you need, collect it, verify its accuracy, and analyze it. That’s why business credit reports are an essential risk management tool for so many companies.

Business Credit Reports are an Essential Risk Management Tool

In addition to providing the information you need to make efficient, confident credit decisions, and helping you to improve cash flow by setting appropriate terms, reviewing credit reports on a regular basis can help you proactively identify risky accounts. Business credit reports also can be incorporated into the marketing/sales process to identify which prospects are more likely to be profitable, and they can be used by the purchasing department to verify that suppliers are financially sound.

Business Credit Reports Have Critical Information

Business credit reports consolidate all the critical information you need to assess credit risk in one place.  They are created by companies specializing in business credit that collect, verify and analyze pertinent information from numerous sources, including public records and filings, as well as trade references. The reports also contain scores that rate a business’s creditworthiness as well as predictive scores, such as the Experian’s Intelliscore PlusSM v2.0, that predict the likelihood of credit delinquency. Business credit reports are available for millions of companies around the world, and usually contain the following information:

  • Company description and associated information, including number of employees, financial data, ownership, and subsidiaries
  • Years in business
  • Industry classification
  • Key executives
  • Location and contact information
  • Business registration details
  • Past payment history
  • Credit ratings and scores that predict payment behavior
  • Bankruptcies, liens, judgments, and UCC filings

Business credit reports enable you to make confident credit decisions and effectively manage credit risk.  Contact us to learn more about how you can incorporate them into your credit decisioning, marketing and supplier review processes.