If you stopped bringing in money today, how long could your business survive? Half of all U.S small businesses only have enough cash reserves to stay in business for 27 days. Projecting revenue and tightly monitoring cash flow is essential to success. Credit reports for business can help you assess the financial situation of your customers to ensure you can more accurately project your revenue.
Why Is Projecting Revenue Important?
Revenue forecasting helps you manage your business more efficiently. When you know what to expect, you can make better decisions about expenses and investments.
For example, you will want to ensure you have adequate cash flow if you are considering any of these situations:
- Expanding your business
- Hiring new or more employees
- Launching a new marketing campaign
- Taking on debt or paying down debt
- Increasing inventory
- Extending credit
If you know that your cash flow is strong, it can give you the confidence you need to move forward. Conversely, if things are not as certain, you may want to approach things more cautiously. Your projections, however, are only sound if you can project your revenue confidently.
How Does a Credit Report for Business Help Project Revenue?
The better you understand your customer’s financial situation, the more accurately you will be able to project your revenue and your cash flow. Credit reports for business can help you assess the financial health of your customers and suppliers.
Credit reports for business can also help you make better business decisions. If you knew, for example, that a customer was delinquent in paying bills with other businesses, you would be warier about extending credit. If a company was at risk for bankruptcy in the next 12 months, you might want to insist on cash upfront. Either way, you would want to know such things to protect your cash flow.
You can learn these things and more with credit reports for business.
The credit report business is made up of three major reporting agencies that can provide an independent assessment of creditworthiness and financial stability for your customers and suppliers.
When you pull a credit report for business, you can learn important information that can help project — and protect — your revenue, including:
- Repayment risk, including slow pays and days beyond terms
- Financial stability and viability over the next 12 months
- Tradelines, credit limits, and terms
- Comparison to industry benchmarks
- Creditor balances
- Credit limit recommendations
- Risk alerts
- Bankruptcies, liens, and judgments
- UCC filings
During Uncertain Economic Times, You Need Credit Reports for Business More Often
One thing we all learned during the pandemic is how quickly things can change. Customers that have paid their bills on time can suddenly find themselves struggling to stay afloat. Chapter 11 bankruptcies in 2020 were nearly 20% higher than at any time in the previous four years.
Bankruptcies are often a leading indicator of general economic distress, and experts say the worst may still be ahead. For example, during the 2007 financial crisis, bankruptcies did not hit their peak until 2010.
Businesses in the real estate, oil and gas, restaurant, entertainment, and retail sectors have been impacted the most. Even some businesses that took advantage of the government’s Payroll Protection Plan (PPP) have shut down. If your customers are in these sectors, you need to pull a business credit report to check on them.
Even if your customers are not in these industries, it is still a good idea to check a credit report for business. Financial issues tend to have a ripple effect. When businesses shut down or struggle to pay their bills, it can flow downstream to other industries that act as suppliers and are left with credit defaults.
The best way to ensure customers are still creditworthy and financially healthy is to pull company credit reports periodically. When you know that your customers are financially stable, it helps you more accurately measure your revenue and cash flow, so you can plan for the future.
Get Credit Reports for Business Instantly
A leader in the credit report business, accredit provides company credit reports from the three major reporting agencies:
- Dun & Bradstreet
Go to myaccredit.com, select the business credit report that is right for you, and you can download it instantly. You do not need to sign up for a subscription service with recurring charges.
Many companies choose to download customer credit reports for business when granting or renewing credit. Others do business credit checks periodically to ensure their customers are not displaying any warning signs of financial distress that might affect their ability to pay.
At accredit, you can compare credit reports for business and view sample reports from Dun & Bradstreet, Experian, and Equifax.
Download a credit report for business on your customers today and protect your revenue.