Why Business Credit is Important – Part III

May 8, 2019
HOW BUSINESSES USE YOUR BUSINESS CREDIT FILEⁱ

Now that you know what scores and ratings are included in a credit file, it may benefit you to learn how other businesses are using that information. There are many different use cases for the information in your file, depending on what type of business you have. Here’s how companies may be using your business credit file if you’re a supplier, a manufacturer, or a construction business:

Supplier

As mentioned above, the Supplier Evaluation Risk Rating can be especially important to suppliers. If you’re a supplier, or a business trying to break into a supply chain, other companies may be looking at this score specifically when they purchase your report. Since some large corporations require a low risk SER rating, this can be one of the main uses for your file. If you have a medium or high-risk rating, you may find it more difficult to break into a supply chain or to work with certain large companies.

As a supplier, the information in your file could also be used to ascertain whether or not you make payments on time and forecast if you will continue to do so in the future. If you’re part of a supply chain, any late payments your business makes could affect the other companies in your chain, and those companies may be using your business credit file to anticipate any issues.

Manufacturer Manufacturers and suppliers are similar when it comes to the way businesses use the information in their business credit file. Just like with suppliers, businesses will want to know that the manufacturer they are researching will be able to deliver. Since manufacturers sell to other companies, and other companies may have to meet certain criteria (low SER ratings), manufacturers need to be able to show they can deliver to those companies per their contract, so that those companies can deliver to their customers. Since one business in the chain can affect all the others, its important that each company have strong scores and ratings.

Construction

There are several reasons a construction company may have other businesses purchase their credit file. A construction company not only has to pay its workers on time, it must also work with credible vendors and meet hard deadlines. Businesses looking to hire a construction company may use the information in its business credit file to see if it pays its workers on time, if there is any financial stress within the company that may prevent it from meeting deadlines or even falling through on a contract. Having strong scores and ratings as a construction company could mean winning more bids and getting more business.

How You Can Use Other Businesses’ Credit There are many different ways that you can leverage your own business credit, whether it’s to get a supplier contract or a loan, to get your product in stores, or to win a construction bid, but there are several ways you can leverage other company’s business credit as well, especially when it comes to your supply chain and your cash flow. You can judge a company’s credibility using business credit.

Other Instances Where Your Business Credit Might Affect Your Company

If you’ve ever needed insurance for your company or a surety bond, or wanted better terms and conditions on a contract, your business credit report may have been accessed by the company you were hoping to do business with. Any time a representative from another company is making decisions about whether or not to offer you a contract or change your terms, there’s a chance that he/she might look at your business credit file and use it to help decide how or if to do business with your company.

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