In today's global network of borrowers and lenders, there are two types of companies: those who are getting credit from lenders and those who are giving credit to new accounts. Millions of businesses operate throughout the world and loan out billions of dollars in cash, goods or services on credit. In order for all this to work smoothly, company need to carefully evaluate the creditworthiness of their partners. It is very difficult to determine the credit of all trading partners in today's global economy, but there is a helpful solution: business credit ratings.
Vital Information
Today's marketplace moves extremely fast. It is important that businesses learn to make fast decisions in order to avoid being left behind. Competitors are always working and waiting a fraction of a second too long can have disastrous consequences.
In order to make fast and sound business decisions, it is important to get data that has been filtered and packaged into helpful information. The hardest part is in making decisions when a company is located in a different country and speaking a different language. It is important for a manager to have vital financial and management information in order to gain important information about prospective partners.
There is a way that a business or risk management officer can get vital professional and objective information quickly to determine the risk of prospective partners. This would be through business credit ratings and full credit reports to make critical and sound business decisions.
The Business Credit Rating
The business credit report has data that has only been crosschecked and filtered to maintain accuracy. After the data has been broken down into useful information it is provided into critical areas that provide vital financial information, upper management names, major shareholders, loan payoff history and other valuable information. This detail can only be obtained when getting a comprehensive credit review.
The business credit rating itself is a single number that comes from all the assembled elements. The credit rating can allow you to quickly know where a company ranks for absolute scale and compared to other businesses. The scale is different for each credit-reporting agency. For some companies it can be one a scale of one to 100 while other companies use alphabet grades such as A, B, C and D. Sometimes a five is a high number and other times it is the lowest. The point is to get a company with a high credit rating so that you can be sure you are getting a business with good credit and finances.
What About Your Rating?
Just as you want to check on the rating of a business you are going to be working with, your company also needs a good business credit rating in order to apply for a loan or credit. By maintaining a good credit rating, you can prove to your creditors that you are a good risk. There are three ways that you can work to improve your credit rating:
Maintaining a strong fiscal standing by paying all debts on time
Make sure favorable data is reported and that a credit reporting agency maintains the changes
Make sure your company's credit reports are up-to-date and have accurate information
When you take the time to examine your credit report regularly both you and the credit-reporting agency can benefit. It is impossible to get rid of negative information on your report, but you can get rid of information that is proven incorrect. When you check for incorrect information, you can improve your rating, but also make sure that the industry remains ethical and accurate.
Patricia Bakers works for Credit Risk Manager, the business credit report service powered by Graydon, a company with a history of more than 120 years in credit management.
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