The Importance of Business Credit Reports
In today’s global marketplace, companies are increasingly doing business with other companies that may be located on the other side of the world. A United States supplier of machine tools may sell to an account in China; a manufacturer of finished woolens in Ireland may outsource its customer service operation to India; or an aerospace company in France may subcontract parts from South Korea. Circulating around the world is a constant flow of goods and services that must be ordered, created, and paid for. Much of this commerce is done on credit. A key element to the smooth functioning of this global exchange is the business credit report.
Business credit reports, like those from Credit Risk Manager, allow companies to evaluate the creditworthiness of a potential account or business partner. They form the basis for decisions other businesses make about each other - and about you.
Your Business Credit Report
At some point, your company will almost certainly need to purchase goods or services on credit, or take out a bank loan for cash flow or capital expansion. When this happens, your potential creditors will order a credit report on your company. By partnering with a reputable online credit reporting service, you can make sure that information in your company’s business credit report is accurate. Your credit rating will influence many important business decisions, including:
- What interest rates your company will pay on borrowed money.
- How much business credit a supplier will extend to you.
- What your insurance premiums will be.
- The level of potential investor interest.
- How much capital you can borrow from lending institutions.
- Your customer relationships.
While you cannot expunge negative information that is accurate, you can ensure that positive information is included in your business credit profile. This includes all on-time loan payoffs and a history of prompt payments to vendors. If this information is not in your report, make sure that it is included.
Other Companies’ Business Credit Reports
Just as your business credit report reflects your ability and willingness to pay your bills, a similar picture is created of your potential accounts. When your company is contemplating extending credit to an account that may be thousands of miles away and separated by language and culture, the most powerful tools that you have are objective and timely business credit reports.
By contracting with a reputable global credit reporting service to monitor the credit profile of a business partner or account, you will get critical information in time to take action:
- The history of the prospective account’s payment practices.
- The supplier’s historical relationships with other vendors.
- Other financial details including key shareholders, balance sheets, and cash flows.
It is also prudent to continuously monitor the credit profile of your existing accounts, so that you can be alerted to:
- Existing clients’ current business conditions.
- Changes to suppliers’ or customers’ business credit reports.
- A key account suddenly falling behind on payments.
- Your competitors’ activities.
- Signs that a key supplier may go out of business.
Business credit reports are powerful, cost-effective tools that enable global businesses to both ensure their own access to credit and to evaluate the risk of extending credit to other companies.
Credit Risk Manager offers instant access to reliable business credit reports. Just enter the name of the company, the city and the country it is based in.