Business Intelligence

Before a business establishes open credit terms for a customer, most will perform due-diligence on the buyer to determine their ability to honor their commercial obligations.For many businesses, due-diligence typically includes evaluating some or all of the following:

• Credit Reports 
• Trade & Bank References
• Prior Payment History
• Financial Statements

These standard methods of credit research are universally known in the business of commercial trade, requiring a certain level of skill to be able to read, evaluate, and assess financial data to properly establish credit limits for buyers.  As you will soon discover - and maybe already know - using these tools does not guarantee results! The challenge many companies have relying solely on these resources is that no matter how acceptable a company may look on paper, there is really no way to determine with any degree of certainty whether the buying company will have financial difficulty in the future, and unfortunately, bad news is usually discovered too late to do anything about it.

Let’s assume, for example, that a supplier performs due-diligence on a buyer using any of the tools mentioned above and decides to extend a $500,000 credit limit. The supplier continues to trade with the buyer for several months, and since the buyer’s payment history has proven to be acceptable, the supplier decides to increase their credit limit to $750,000. Several months pass with no problems and the supplier agrees to extend yet another credit increase of $1,000,000 to the buyer. Everything seems to be progressing wonderfully, right? Not so fast.

The supplier, like many other companies selling on open credit, typically shift their focus from performing ongoing due-diligence on the buyer to placing emphasis soley on the good payment history of the buyer, continuing to sell to the buyer at very high levels for as long as the buyer continues to pay. Life is good! So it seems.

What the supplier in this example doesn’t know is that for the past several months this very same buyer has completely stopped paying their other suppliers….but they continue to pay their invoices to them like clockwork. Why is this important? Well, it’s a direct indication that the buyer is likely up to something and it isn’t all that good! A possible reason for this scenario is that the buyer could be getting ready to either shut down their operations, or they could be in the process of filing bankruptcy with the goal of reorganizing under a different name. In either case, it’s only a matter of time before the buyer defaults on his obligations to the supplier, leaving them subject to millions of dollars in unpaid products & services, and of course, negatively impacting the bottom line.

So how does a company get access to such sensitive information and know in advance when to reduce the credit line or eliminate it altogether without getting burned? It’s simple - it’s called Business Intelligence.

Business intelligence, or advanced credit reporting & monitoring, is a highly effective service used by companies which allows them direct access to real-time credit ratings on millions of companies worldwide. These credit ratings are the same credit ratings used by credit insurance underwriters who evaluate each business on an ongoing basis and assign a credit rating based on information and advanced knowledge on how each company is currently trading on the open market. So what does this mean to your company? Read on.

Imagine being able to log onto a website, enter your buyer information, and instantly receive the latest credit rating from an experienced underwriter right at your own desk? What if you knew how much credit to give a customer on the fly - knowing that the credit rating you receive is the same credit rating the credit insurer uses for their credit insurance policyholders? How powerful would it be to your business to have all of the work already done for you so you can concentrate on your core business and use your employee assets elsewhere? It’s very powerful - and is available right now.

With real-time information on your customers, you don’t have to worry about the exhausting steps and expenses associated with performing your own due-diligence on the companies you want to do business with. Of course, you can always continue to research your buyers as you normally would and use the credit ratings as additional support to your decisions …but let’s take Business Intelligence one step further. Imagine obtaining a credit rating score on a buyer in January and in April you receive a monitored email alert notifying you that your buyer’s credit score has been downgraded - or upgraded - and the reasons why. Do you think this information could be valuable to your company as you use it to extend more credit to your customers or pull back the line if the information is derogatory? You bet it would.

From our professional experience, there is nothing better than having a worldwide credit insurance & information organization looking over your shoulder watching over your clients keeping your company out of harms way. Ask D&B if they offer such a service - it doesn’t exist!  D&B is a data mining company and earns fees for selling information. The key difference between D&B credit ratings and credit insurer credit ratings is the vested interest.  Credit ratings provided by a credit insurer are the same ones used for policyholders - so you can be assured that they are the best credit ratings available anywhere!

Now for some bad news. Credit monitoring services at this level are not available everywhere as there are limited companies that offer this service. The good news is we represent an organization that is a leader in credit reporting & monitoring services on an international basis. Any company that is serious about having access to the latest customer information must try this service - these products can make a positive impact on the way you do business. Contact us today for more details.

Have a question or want to learn more about business intelligence? Feel free to post your inquiry on this blog or contact us directly at 1-631-585-0960.