Commercial credit reports help you assess risk so you can make an informed decision. They also offer a number of benefits to businesses.
Commercial credit reports help you evaluate companies, including corporations, partnerships, and sole proprietorships, as well as individuals, such as officers, directors, business owners, prospective partners, and consumers, across a variety of industries.
When considering a company that may become a business partner, there is a lot of information that should be obtained to ensure you make the best decision possible.
Here are 6 key areas your commercial credit report should include.
1. Company Profile:
When investigating companies, you want to confirm the full legal name of the business, along with its legal corporate status. This will verify that the company is active and in good standing with Companies Branch and Corporate Tax Branch (Canada Revenue Agency).
Default notices, cancellations, and dissolutions should also be reviewed, along with name changes, operating names, date of incorporation, addresses, officers, directors and shareholder particulars. This will help you identify any areas of concern within the organization.
If the company is a sole proprietorship or partnership, you will want to review current information collected from the applicable Ministry to determine details regarding start date, status, address, and partners.
2. References:
Before working with any company, you want to contact current suppliers and landlords. They will be able to provide you with up-to-date information about the company in question and may offer insights into their overall character.
Suppliers should be able to provide current balances, credit limits, payment terms and experience.
Landlords should be able to provide information about the rental agreement, their ongoing relationship with their tenant and their experience with rental payments.
3. Derogatory Information:
Knowing if there is a history of collections, legal actions and judgements, bankruptcy or other derogatory credit information is critical in deciding whether or not to work with someone.
When you are reviewing a potential business partners background you want to determine whether or not any collection actions were launched against the company in question. You also want to find out the particulars of pending legal actions launched against the company and whether any judgements have been obtained.
You will want to look at Government documents to determine if there is a history of bankruptcy, consumer/commercial proposals, debt consolidation orders, receiverships, and CCAA filings and you will want to look for information regarding late payments, NSFs, collection claims, tax liens, legal actions, judgments, bankruptcies, and proposals.
4. Financial Information:
Current information should be obtained from banks and financial institutions. This will allow you to confirm term loans and operating lines including authorized limits, current balances and repayment history, as well as identify types of accounts, account balances and NSF activity.
You will also want to look at their credit file, which will provide a list of trade items and reveal historical payment trends and experience.
5. Lien Registrations:
When assessing whether or not you should work with a business, you will want to review the personal property lien registration.
The PPSA will provide updates that identify security agreements and liens, including borrowing facilities, lines of credit, term loans, lease facilities, and chattel mortgages. Negative registrations may also be uncovered, including tax liens, writs, land charges, crown charges, and statuary claims.
6. Confirmation of Assets and Liabilities:
Finally, you will want to review the company’s assets and liabilities.
This will include a general validation of credit card balances, mortgages, term loans, lines of credit and leases, as well as assets including bank account balances and ownership in real property.
A Land Title Sub-Search will confirm ownership in real property, including details regarding purchase price, mortgages, and the last assessed value.
At Quality Credit, we specialize in fast, accurate and informed reports to help you better evaluate credit applicants, prospective customers, suppliers, and business partners.
To find out more about our credit reporting services, contact us today!
Tags: Business Credit Reports
