Suppliers Risk Assessment

Earlier this week, I looked at the role that a Paydex score plays in the business credit-assessment process. It's a valuable tool and a great starting point for any credit risk analysis.

But it's not the only tool that you can - or should - use.

To understand why, let's take a closer look at what else goes into a complete business credit report. These are the types of things you'll learn from a source like a Dun & Bradstreet Business Information Report (BIR) - widely considered the industry standard for business credit risk-management.

• A summary that gives you an instant overview of a firm's line of business, sales, net worth, and general financial condition;
• Alerts dealing with ownership changes, bankruptcies, and other major business events;
• The Paydex Score, based on a company's payment history;
• Financial information including assets, sales, liabilities, and profits;
• Public filings such as lawsuits, liens, and judgments;
• A business history that provides insights into both the company as a whole and its key executives;
• An operations overview that covers things like what a business does, the number of employees, the location of key facilities, and known subsidiaries;
• A Payment Summary that breaks down a company's payments by industry, credit-limit histories, overdue payments, collection accounts, and a host of additional data.

In this context, a Paydex Score is a bit like a snapshot - while the additional data you'll find in a BIR is more like a three-dimensional look into a company's history, operations, and financial health.

Obviously, this kind of information is essential for making informed business credit decisions. Yet it's also a valuable tool for making other business decisions, including:

• Sales team planning;
• Marketing tactics;
• Evaluating product or marketing partnerships;
• Evaluating vendors and suppliers;
• Performing competitive research and analysis.

In other words, don't just look as business risk management as a credit question. The data you'll find in a report like a Dun & Bradstreet BIR allows you to manage risk across your organization. Just as important, it can alert you to new business opportunities long before your competitors get wind of them.