Why It Is Important to Run a Business Credit Report on Customers
Around 70% of small businesses have outstanding debt. More than a third of them have credit scores so low that they are unable to get business loans or credit. Of those that can secure loans from the Small Business Administration, one out of every six goes into default.
For this reason, it is important to carefully assess risk when you extend credit to clients or customers.
When a business defaults on a loan, lenders take action against the business. If it is a secured business loan, a default usually leads to the seizure of revenue, inventory and/or equipment. If it is an unsecured business loan, lenders file a lien against the company’s assets. Either way, if this happens to one of your customers, the chance of recovering what you are owed decreases.
If your customer declares bankruptcy, and you are an unsecured creditor you will be in a long line behind secured creditors to be paid. Secured creditors may need to repossess the assets in order to be paid. You as an unsecured creditor will only have an opportunity to collect what is owed to your business if all these debts are satisfied, and there is no guarantee you will receive any payment.
Download the Executive Report on this page to learn:
- How a business credit report helps protect your business.
- What is included in a business credit report?
- How to handle late payments, defaults, and business closings.
- Even your long-term customers may be at risk.
- How to pull a business credit report.
Breathe easier being able to anticipate the financial situation of your customers and suppliers.
Quickly and easily search and select business credit reports from Dun & Bradstreet, Equifax, and Experian.