Concerned Your Customer’s Financial Situation Has Changed? Use a Company Credit Report to Find Out

Ann Marie Smith

Apr 5, 2021

The COVID pandemic has taken a toll on businesses worldwide. It has changed many company’s fortunes and led to a dramatic increase in businesses closing or declaring bankruptcy. Even for companies that are still operating, payments are slowing. A February 2021 study of 4 million companies showed a 44.9% increase in late payments globally — a warning sign of financial stress.

Many businesses are taking proactive measures to protect themselves from bad debt or slow pays by pulling a company credit report on their customers. With the uncertain economic climate, you want to know that your customers can pay their bills.

Examining a company’s credit report can help you make a better business decision about when to extend credit, whether you need to change credit terms, and whether your customers will be able to pay.

What Can I Learn from a Company Credit Report?

Company credit reporting agencies collect information on businesses. They track tradelines, the credit accounts your customers have, for trends that may indicate financial stress. If a company is starting to accumulate more debt, slowing down payments to creditors, or failing to pay its bills to its suppliers, its credit score will drop.

There are three major company credit reporting agencies that produce company credit scores.

  • Equifax
  • Experian
  • Dun & Bradstreet

Each of the credit reporting agencies gathers slightly different information and presents it differently. All of them will give you the basic information that can help you assess your customers, including an overall credit score and leading indicators about financial viability and repayment risk.

For example, you can see how credit reporting agencies assess the likelihood of a business incurring a severe delinquency or charge-off, or the likelihood of bankruptcy in the next 12 months.

Equifax and Experian also provide information on creditor balances, days beyond terms for payments, and public filings that may indicate financial stress, including:

  • Bankruptcy
  • Liens
  • Judgments
  • Uniform Commercial Code (UCC) filings

A significant amount of business credit is unsecured, so keeping an eye on public filings is important. If a company enters into bankruptcy, unsecured creditors will be well down the list for payment of debts. If you see bankruptcy filings early by using a company credit report, an earlier warning may help you secure a better place in line.

To learn more about which company credit report you should use to evaluate your customers, download our Executive Report: How to Select the Right Business Credit Report.

Tracking Financial Performance of Your Customers with a Company Credit Report

A company’s credit report will provide a snapshot of its current situation and predictions about future performance. Many businesses will routinely use company credit reports to track financial performance over time.

For example, pulling company credit reports on your largest accounts quarterly can help you assess whether your customer’s financial situation has changed. If you see a drop in their credit score or notice an increase in your customer’s days beyond terms for payments, it provides you the information you need to assess your risk.

If you are doing business with a large company, corporate account, or business with multiple locations, you also want to be aware of the financial situation across the corporation. A corporate business credit report can provide the information you need to make an informed decision.

It is important to monitor the financial situation of key accounts regularly — especially during uncertain economic conditions. If you see warning signs, such as customers that are consistently paying you late or your instincts tell you something is not quite right, protect yourself by pulling a business credit report to make sure that more significant problems do not exist.

Hopefully, you will find that everything is fine and you can continue to have confidence in your customer’s ability to pay. If there is an underlying problem, the sooner you are aware of the issue, the better business decisions you can make.

Pull Company Credit Reports Instantly

You can pull a company credit report on any of your customers or suppliers easily. Unlike personal credit reports, you do not need permission to look at your business customer’s credit score.

Go to myaccredit.com, choose the company credit report you want, and pay online. You can download the company credit report instantly. With accredit, there is no waiting and no need to sign up for a long-term subscription.

With economic conditions continuing to change, buying a company credit report on your customers can give you the peace of mind that you can continue to get paid.

Search and select business credit reports from Dun & Bradstreet, Equifax, and Experian.