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A Business Credit Report is as Important as Your P&L

Author: Ann Marie Smith
Published: 2021-07-26

Managing profit and loss (P&L) is one of the most important things you do in your business. Your monthly P&L statement shows you where you made a profit or experienced a loss. If you do not have enough cash coming in to pay your bills, you will not be in business for long.

A business credit report is just as important because it helps protect your cash flow and your profitability. A business credit report helps you make better decisions about whether to extend credit to a customer and under what terms. It helps you decide which suppliers to use and whether you can count on them to deliver the goods and products you need to run your business. And a business credit report can help you negotiate better terms if you are asking for credit or need to get outside financing.

Business Credit Reports for Customers

When you pull a business credit for your customers, you will see an overall credit score. This gives you an independent assessment of a company’s overall creditworthiness– similar to a FICO score for personal credit. Depending on the business credit report you choose, you can also learn:

  • A company’s financial stability
  • If a company is behind on paying its bills
  • How much credit they have already used
  • The likelihood of getting paid on time or whether you should expect slow pays
  • The risk of a company going out of business
  • Whether a company is dealing with bankruptcy, liens, or judgments
  • Details about tradelines, account status, and balances
  • Balance sheets and income statements from publicly traded companies

You can also get a credit limit recommendation based on how they have handled debt in the past.

The information helps you better forecast when you will get paid and whether you are taking on an acceptable level of risk.

Business Credit Report for Suppliers

You should also pull a business credit report on your suppliers. If your supplier is experiencing financial stress, their problems can become yours.

When suppliers are struggling, the impact happens downstream. When they are having trouble paying their bills, it can impact their ability to get the materials they need to produce the products you need. This can result in backorders or failed deliveries. Often, you will not realize there is a problem until orders do not show up. By then, it may be too late to find alternative suppliers without negative financial repercussions.

Before you issue a purchase order, protect your P&L by pulling a business credit report on your suppliers.

Business Credit Report for Your Business

Your business credit report will show you how other organizations view the financial health of your business. Your creditworthiness will impact a variety of things, including:

  • The amount of credit suppliers will extend to you
  • How much banks will lend you
  • The interest rate you will pay
  • The repayment terms and conditions

Your credit score can also impact the insurance rates you will pay for your business.

When you know how others view the financial health of your business, it can give you the confidence you need to negotiate better rates and terms. Better rates protect your bottom line.

Financial Fortunes Can Change Quickly

In business, things can change fast.

A year ago, if you listed Nieman Marcus, Century, 21, GNC, Pier 1 Imports, Lord & Taylor, Hertz, or Gold’s Gym among your business customers, you would have been in good company. Yet each one of these businesses has now filed for bankruptcy protection.

Just because you could depend on a customer to pay their bills on time or a supplier to deliver what they promised in the past, it does not mean they will continue to do so.

Checking a business credit report regularly can help you see changes in a company’s financial health earlier and avoid problems for your P&L.

How to Buy a Business Credit Report

The easiest way to buy a business credit report is to go to href=” You will be able to compare the different reports from the major business credit reporting bureaus. You can also view samples of the business credit reports from Equifax, Dun and Bradstreet, and Experian.

Once you determine which business credit report is right for you, you can download it immediately. You do not need to wait and you do not have to sign up for a subscription service. You can buy as many (or few) business credit reports as you want and review them immediately.

If you are not sure which business credit report is right for you, download our Executive Report: How to Select the Right Business Credit Report.