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How Credit Reports for Business Help With Collections

Author: Ann Marie Smith
Published: 2021-03-22

In 2020, the pandemic played a significant role in disrupting supply chains and cash flows for businesses. More businesses were forced to take on debt or additional credit to either stay afloat or handle the increased demand. Other businesses loosened the rules when extending credit to accommodate customers.

It has created more debt in the pipeline than in previous years, and is also leading to later payments. In 2020, 43% of invoices in the U.S., Canada, and Mexico went unpaid by their due dates — a 25% increase from the year before. In the U.S., businesses also reported a 72% increase in payment defaults. In total, consumer debt now tops $14 trillion.

Trying to stay ahead of slow pays and collections is essential to maintaining a healthy cash flow.

Protect Your Organization With Credit Reports for Business

Every business has to handle some collection activities. Sending reminder emails, statements, or invoices are all part of the routine. When customers ignore repeated requests, however, it can be a problem.

The best way to handle collections is to avoid the situation in the first place. This is why credit reports for business are so valuable. They let you see what is happening with a customer so you can make smarter decisions about extending credit or whether you need to increase your collections efforts.

By examining a credit report for a business, you will be able to see significant information about their financial situation and look for tell-tale signs of problems with their credit. Depending on which credit report for businesses you look at, you will be able to tell:

  • How much money they owe other businesses
  • How quickly they are paying other outstanding debts
  • Tradelines, credit limits, and terms
  • Their performance compared to industry benchmarks
  • The repayment risks, such as days beyond terms (DBT) and slow pays
  • Creditor balances

This is valuable information to have before granting additional credit or approaching customers for collections. If you know their financial state and how they are treating other creditors, it can help you frame your collections efforts. For example, if you know someone’s financial situation looks good and they are paying other people on time, you will pursue collections differently than with someone who has a mountain of debt and is delinquent on payments to multiple suppliers.

A credit report for business can also show you the danger signals of even bigger problems, such as:

  • Bankruptcies
  • Liens
  • Judgments
  • UCC filings

You can receive risk alerts and an assessment of a company’s financial stability and viability over the next 12 months. Some credit reports for business will also provide credit limit recommendations based on an analysis of a company’s financial health.

Dealing With Delinquencies

Another advantage of pulling a credit report for a business is to get ahead of delinquencies. If you see financial troubles on the horizon for a customer or they are suddenly slow in paying everyone, it can help you determine how to move forward.

Do you want to send them to an outside collection agency? Is it the right time to sell problem invoices to a broker at a discount rate or consider accounts receivable financing strategies, such as factoring? Is it better to write another collection letter?

If you do need to write a collection letter, you can use one of our collection letter samples to help guide you.

When it comes to collections, you always have to balance the time and effort it takes to collect versus the number and amount of outstanding invoices and the customer relationship. A loyal customer that is having a temporary cash flow issue deserves better treatment than a one-time purchaser that is simply not paying.

Which Credit Reports Are Right for My Business?

While you can compare details on the types of credit reports for business that are available online, here is a quick summary of what you get from each of the three major business credit reporting agencies:

Experian Score Summary

  • Business Identity
  • Risk Dashboard
  • Business Description
  • Trade Payment Summary
  • Payment & Legal Filing Information

Dun & Bradstreet Score Summary

  • Business Viability
  • PAYDEX Score indicating risk of slow payments
  • Predictive Information, including Total Loss Predictor
  • Company Profile and Family Tree

Equifax Score Summary

  • Business Identity
  • Risk Dashboard
  • Business Description
  • Trade Payment Summary
  • Payment & Legal Filing Detail

Experian Premier Profile

  • Credit Risk Assessment
  • Financial Reports for Publicly Traded Companies
  • Trade Payment Summary and Detail
  • Derogatory Events, such as bankruptcies, suits, liens, etc.

Dun & Bradstreet BIR Report

  • Payment Summary
  • Amounts paid to creditors, including terms
  • Public Filings
  • Financial details
  • Bankruptcy proceedings

Dun & Bradstreet Public Records Report

  • Bankruptcies
  • Judgments
  • Liens
  • Suits
  • UCC Filings

How Do I Get a Credit Report for a Business?

Pulling a business credit report is simple. By going online to accredit’s self-service website, you can buy credit reports for business in just a few simple steps and download your report immediately.

Search and select credit reports for business from Dun & Bradstreet, Equifax, and Experian.