Want to Make Sure You’ll Be Paid by Your Customers? Use Business Credit Reports

Ann Marie Smith

Jan 11, 2021

If one of your customers has filed for bankruptcy or is seriously delinquent paying its bills, you would want to know before extending credit. If the company is not paying other businesses on time or has pledged its assets as collateral against loans while continuing to rack up debt, it would be helpful to know before shipping them an order.

If they do not pay, you will need to write it off as a loss. So, it is a doubletrouble. Not only are you out the merchandise and the money, but you do not have the ability to sell the goods to someone else. If the company does not pay on time, that is also a problem. Both situations are can erode cash flow.

Every time you grant credit to a customer, you are taking a risk. Would you like to know how big a risk you are taking and the likelihood you will get paid on time?  You can if you buy a business credit report.

How to Check Credit on Your Customers

Uncertain financial conditions during the past year have caused problems for a lot of businesses. This means companies that have been great customers for years may be struggling. 2020 was a record year for business closures, layoffs, and bankruptcies. More than 100,000 businesses have permanently closed their doors since March and more than 800 U.S. businesses close every day.

Many businesses continue to evaluate credit based on references. This means they are trusting hand-picked references may not represent what is really happening at the company. Customers that are having trouble paying their bills often stay current on some payments and provide those companies as references. So, the information they provide might make it look like everything is fine, but you cannot see what is going on beneath the surface. A business credit report gives you the entire picture.

How to Get a Business Credit Report

You need to get permission from a customer to run a personal credit check but you can buy business credit report scores on any business without getting permission. Business credit information is public and you can download it instantly from the accredit website.

There are three major business credit agencies–Dun & Bradstreet, Equifax, and Experian, and they use slightly different methods to evaluate the financial health of a business and produce a credit score.

The Dun & Bradstreet PAYDEX Score operates on a scale of 1 to 100. Businesses with low scores present the highest risk. To obtain a high score, a business must pay its bills on or before the due date. The PAYDEX score is primarily used to judge whether to extend credit and terms to enable a company to better manage cash flow.

The Experian Intelliscore ranges from 1 to 100. Higher scores indicate the lowest risk. Experian also provides a Financial Stability Risk rating and credit trade payment information.

The Equifax Score Summary ranks business credit scores on a scale of 101 to 715 (Higher scores indicate the lowest risk ) and also provides business credit risk scores that predict the likelihood of severe delinquencies or charge-offs in the next year on a scale of 101-992, lower scores reveal higher risks.

Before you decide which company has the best business credit report for your needs, you should compare them by reviewing samples. You can do that and buy business credit report information instantly on the accredit website.

Additional Business Credit Report Information

As is true with personal credit scores, length of credit history, credit utilization, and debt payment history are all taken into consideration when determining an overall score. However, there is also additional information that is evaluated for businesses. On each report, you get an overall score that indicates credit-worthiness along with a basic risk assessment. Depending on the report you choose, you also receive information about:

  • Bankruptcies, liens, and judgments
  • UCC filings
  • Creditor balances
  • Credit limit recommendations
  • Repayment risk, including slow pays and days beyond terms (DBT)
  • Financial stability and viability over the next 12 months
  • Tradelines, credit limits, and terms
  • Comparison to industry benchmarks
  • Risk alerts

All this information can help you determine the amount of risk you are comfortable with for each customer.

Buy Business Credit Report

Buying a business credit report costs money, but it can give you the peace of mind that you are mitigating risk for your business. It can give you the confidence to extend credit with new customers, renew credit for existing customers, and avoid potential bad debts.

accredit makes it easy to buy business credit reports on existing and potential customers. Easily download the business credit reports that you need.