Doing What’s Best for Your Business
Landing new contracts and keeping existing ones are two crucial goals business owners aim for. To accomplish these goals, you need to make sure inquiries* being made into your business credit reports reflect a positive picture of your company.
Your D&B® Supplier Evaluation Risk Rating (SER) predicts whether or not your business will cease operations or become inactive over the next 12 months, based on various key factors. With ratings based on a scale from 1-9 (where one (1) has the lowest risk rating, and nine (9) has the highest risk rating), an inquiring customer can use such ratings to quickly determine if new and existing suppliers are too risky to do business or to maintain an existing relationship with.
In order to try to keep your business’s SER Scores in the lower-risk rating scale, there are several elements you should pay close attention to.
How you pay your invoices can have a positive or negative impact on your SER Scores. Avoid making late payments, and if possible, pay ahead of the due date for maximum influence. The number of accounts you manage can also play a role, because the presence of several accounts can show stronger fiscal management when compared to small-business owners who only manage a single credit account.
Several minor or major changes in your company’s operation can impact your business’s SER Scores. In particular, new changes in company management, an increase or decrease in the number of employees, or the age of the business can all factor into your SER Rating.
Any number of lawsuits, liens, judgments, or bankruptcies can have a serious and negative influence on your SER rating. These types of records can signal that a business is facing financial troubles. Always work to set up payment arrangements with a creditor if your company cannot meet its current obligations in order to avoid a lawsuit and potential judgment.
A business with strong financials is typically considered to be much less of a risk. Any dramatic changes to your financials can trigger an impact on your SER Scores. Any total liabilities-to-net-worth ratios greater than 1.0 should be avoided by your small business. Here are several steps you can take to influence your score.
Step 1: Review your business credit report to make sure all your company information and financials are up-to-date.
Step 2: Add additional trade references** to your D&B file using a service such as CreditBuilder™ from Dun & Bradstreet to show the number of accounts you manage. However, if you do have accounts that have been paid late, avoid adding them as trade references. Adding them may negatively impact your score, as it does not demonstrate fiscal responsibility.
It should be noted that trade references are added to your business credit file pending acceptance and approval by D&B. To expedite this process, it can be a good idea to contact the company you’re using as a trade reference to let them know that D&B will be reaching out to them to verify your claim.
Step 3: Start paying your invoices better than terms. By paying 10-20 days ahead of the due date, you may positively influence your SER ratings and PAYDEX® score.
Taking proactive steps such as these to help ensure you maintain favorable SER Scores may help your business land new contracts, and maintain its existing ones.
Photo Credit: Costa Rican Times
*Inquiries are the number of individual product(s) purchased by a customer(s) on a D&B D-U-N-S® Number in a rolling one-year time period. Although the specific name of the inquiring customer(s) is not available, your product may allow you to see the inquiring customer’s industry.
**Trade References will be added subject to D&B® verification and acceptance. Please see http://www. dandb.com/glossary/trade-references/ for eligibility, process and other information regarding Trade References.