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SMEs don't credit check - is it price or an education issue?
I was a bit surprised to read in the Daily Telegraph on the 8th july about a Barclays Bank idea to offer free of charge credit checks to its 580, 000 corporate customers. OK, the service is only a plan and I'm not sure where they're going to find millions of free credit reports to give away, but the more interesting aspect of the piece by Richard Tyler was that he quoted Barclays as saying that small businesses didn't do credit checks on customers due largely to the cost of such services from the established agencies. First of all, i have to say Barclays is absolutely right to say that a large majority of small businesses don't avail themselves of credit reports before opening up accounts. However, it is also true that prices of credit reports have dropped considerably over the years, and there are many credit agencies offering tailor made products at low prices to small businesses nowadays. Personally, I think the reason why SME's don't use credit reports is more to do with a lack of credit management expertise within SMEs- and that's not a criticism; its a fact that most businesses under 6 million turnover don't employ professional credit managers who know all the tricks to get cash in quicker and to avoid bad debts and protracted payments. Most small businesses don't have any finance department specialists, as their businesses are too small to sustain them. Therefore, SMEs really do need a lot of help from their accountants and other external advisers, which is why i think Barclays should at least be patted on the back for trying to tackle the issue.
Although many small practices do not carry out credit checks due to cost and lack of education, there are products out there can provide the answer. CallReport from Callcredit is a cost effective, online system which allows you to check your clients credit history in a matter of seconds. Callcredit can assist businesses by showing firms whether their client has CCJ’s, Bankruptcies or Insolvencies. Information such as length of residency is also shown via the electoral roll.
It is noted that many of the smaller firms do not employ professional credit managers (due to cost etc) CallReport enables you to assess the history of your clients credit and make a risk based decision without incorporating the cost of employing another individual.
CallReport is a credit report system that is used to identify, verify and authenticate an applicant’s name, address and the presence of any adverse public data. It does this by checking against multiple data sets that are updated on a regular basis.
CallReport is accessed via the Internet, once a company is using CallReport all you need to do is simply key in your customers name and address and we will automatically check against the above datasets and return a clear and concise report to the users screen within seconds. The report can then be either printed off as hard copy or stored electronically.
The system is also fully auditable with the ability to administer users and assign privileges as well as having in built data compliance features for extra reassurance.
Perhaps a solution to the SME credit checking problem?
Posted by :Jo Newbould | July 11, 2008 2:45 PM
Martin Williams is right when he says cost is not the problem for SMEs. Many don’t use credit reports – but lots do!
At checkability we specialise in serving the SME b2b market with company, sole trader and partnership credit information. Over the last 9 years more than 30,000 SMEs have subscribed to the credit services provided by our group.
Because many of our customers have no credit management expertise, we make our reports simple to use and easy to understand – without reducing their effectiveness.
The range of services we offer covers all SME needs:
CD or web;
All the reports a business needs for a modest, fixed, annual subscription;
Both UK Registered Company and Sole trader business reports;
Customer portfolio monitoring alerts;
One-off reports only, if required;
International Reports;
Willing telephone-based customer support – you speak to a real person;
Effective debt collection service.
And there’s a free trial – can we say fairer than that?
Posted by :Rob McLaughlin | July 14, 2008 11:47 AM
Isn't it much more the point that credit reports can only ever look backwards and therefore until the ship hits the iceberg, there is often no iceberg even on the radar? Of course, skilled analysts can retrospectively look at the data and show there were warning signs, but SME owner/managers are not skilled analysts, they're traders. SMEs surely therefore look to other SMEs payments experiences with larger customers far more than historic database reports.
Posted by :Michael Carter | July 17, 2008 4:28 PM