Current and reliable information on customer payment history and changes in credit ratings is essential for managing credit risk and protecting cash flow in the new normal. The rapidly changing business environment makes it very difficult to stay on top of new developments as the economy struggles to recover from the recession.
Business credit reports from companies such as D&B, Experian and TransUnion have traditionally been a major resource for payment history and credit ratings. However, the new normal has changed the economy, and you should consider the risks and rewards of using business credit reports before relying on them for credit management.
The business environment is constantly changing as companies and the economy struggle to recover from the recession. Virtually every day there are announcements of major company layoffs, closings and bankruptcies. News headlines report actions taken or contemplated by the Federal Reserve and the Federal Government to assist companies and individuals, and bolster the economy.
In this frenetic environment, it is not possible for business credit reports to be kept up to date and be reliable. Even before the new normal, payment information on credit reports was often stale because of the time lapse in reporting by creditors. Now with the business landscape changing daily, business credit reports may no longer be reliable.
Business credit reports are easy to access on line. Many credit reporting agencies also have credit apps for obtaining the information you need from anywhere and at any time. This is particularly helpful for working from a remote location. Since credit reports do not involve contacting references directly, they save time which can be spent contacting customers. However, credit reports should be used in addition to contacting trade references, not in lieu of them.
Credit reports have more information on customer payment history than you can gather from contacting a few references directly. The number of creditors reporting to the credit reporting agencies provide a broader sample, and can include a variety of credit terms other than the terms your company offers. This information can provide insights into customer payment history, which you may find helpful in managing credit risk.
There are risks and rewards to using business credit reports. They should be just one of the tools used to manage credit risk. With automated credit management solutions, you can provide your team with a dashboard for each account, which incorporates the key data needed to manage credit.
Using the dashboard solution by Lockstep Collect, your collectors can see at a glance a customer’s account status, credit score, whether payment is usually late or on time, and by how many days. A color scaling used to rank credit quality will pop up when searching for a company in Lockstep Collect.
Lockstep Collect, a leader in cloud-based credit and collection platforms, provides automated solutions for effectively and efficiently managing credit. Lockstep Collect is an experienced software partner that can help you navigate the challenges of managing credit risk.
If you would like to learn more about how you can benefit from automated credit management solutions, please contact Lockstep Collect at www.anytimecollect.com.