We would never lend a large sum of money to someone without first determining whether they would be able to pay us back, yet on a regular basis we extend credit, directly or indirectly, to our many business partners.
When we offer clients terms that set the payment date after delivery of goods, when we pay a manufacturer, in advance, to deliver on a finished product or when we enter into a joint venture, believing that the other party will perform as promised, we are extending credit and putting our companies at risk.
That is why it is so important for companies, no matter the size, to obtain a credit report before entering into any business relationship.
Business is risky and being able to reduce that risk can have a huge impact on your success. By knowing who you are working with and whether they are able to meet obligations, fulfill orders and pay bills, you can ensure that your company remains successful.
The problem is that many companies have come to believe that they don’t need credit reporting.
Sometimes, they feel that their size does not justify this level of risk management or that the costs associated with credit reporting are too high.
But, once you compare the cost of an effective process against the benefits gained, it becomes apparent that enhanced screening is more advantageous than not!
Benefits of Business to Business Screening
- Reduce Costs
No matter what you are using business to business credit reports for, you will soon see the financial benefit of opting for a more thorough review process. And while those savings may come in different forms (reduced training costs, improved account receivable turnover, lowered bad debt expense, etc.), increased research will result in more savings. - Improve Lead Times
By ensuring you are working with the most effective supply chain partners you can optimize the time it takes to fulfill orders, leading to greater efficiency, improved customer satisfaction and more business success. - Increase Productivity
Before entering into any business relationship, hiring a new employee or extending terms to a customer, you need to ensure are working with the right people. In doing so, you can not only save time and money (such as costs associated with training new employees), you can also increase the effectiveness of business relationships and company productivity. - Improve Cash Flow
If your business is dependant on long term customer relationships, ensuring that you are working with the right customers is important. By verifying that your customers’ businesses are successful and that they are in the position to make their payments on time, on a go forward basis, you can ensure that you are optimizing cash flow.
And these are just a few of the ways that credit reporting can help your business.
For more detailed information on how credit reporting can help with your business, take a look at our download a free industry brochure!
Tags: Business Credit Reports
