Build a Better Credit Reference

Build a Better Credit Reference


As a business owner, you want access to as much information as possible before making a decision. “The access to sufficient and reliable information is the foundation of all good business decisions,” agrees Claire Fawbert, commercial solutions, market manager at TransUnion. Credit is no different.

“When trade creditors encountered the last recession and credit freeze, emphasis switched from granting credit to a greater focus on risk mitigation and liquidity management,” she says. This meant managers exerted tighter controls over credit limit extensions, invoked shorter terms and reduced lines of credit. “The focus moved to better risk management by engaging in active vigilant collections, constant monitoring and continued financial reviews.” Companies that managed to keep bad debt down to a minimum survived the recession, some even experienced growth. Companies that defaulted or were not able to minimise bad debts were less successful.

Streamlining partnerships

With a second recession looming, it’s up to business owners to ensure their systems can handle the strain of a tight economy. “Not having sufficient data to support credit decisions can be a nightmare and may result in inaccurate decision-making based on insufficient data,” says Fawbert. Companies that have up-to-date credit information have the upper-hand: if you know exactly what is happening with your business’s financials you can control the budget and you become an attractive partner.

“Successful business ventures often require owners to partner with or engage the services of external parties to maintain positive operations amidst economic uncertainty and aggressive competition,” says Fawbert. “Validating information helps businesses minimise their risk and maximise their opportunity. It is in this light that credit departments access business information from external data sources like TransUnion Credit Bureau to verify and validate business information and guide them in the credit decision process.”

Transparency a plus

Large businesses tend to have their houses in order, with more than sufficient data available on the business. SMEs however are far more likely to have insufficient information available to provide the appropriate insight required by credit departments doing their due diligence.

“A record is only as good as the information contained therein,” says Fawbert. “SME owners are strongly encouraged to register their information with credit bureaus to
create and foster an environment where business can trade as legitimately and transparently as possible, reducing risk.

“A business credit record provides valuable information such as civil court records, default information, details and defaults on the principal or directors of the entity, as well as confirmation of the business’s banking details and trading information.”

While Fawbert believes that as the custodians of the greatest asset in most businesses, credit managers will continue to be defensive in the foreseeable future, she adds that their risk decisions will be determined by information they have at hand, especially when assessing SMEs.

“Ensuring your business credit record accurately reflects who you are and how you deal with vendors and suppliers can empower your business for growth,” she says. “Make sure your records are in order, that your credit score is good and that you are registered on a credit bureau. This immediately increases your chances of signing large deals and contracts. ”

Resource: Should you wish to update your business record, email Suzy on

Nadine Todd
Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.