If you extend credit to other businesses, you no doubt know that making the right decision about a firm’s creditworthiness is critical ─ and not always easy. But you don’t want to wade into these decisions uniformed.
Well, you don’t have to. A business credit report is a great tool that offers a comprehensive overview of where a business is succeeding and failing from a financial perspective. Essentially, a business credit report reviews the impact of different activities that a company undertakes (late payments, available credit, credit utilization, etc.) and gives you, the creditor, access to a variety of financial information including:
- The business’ credit score
- Does the business make payments on time?
- Does it have any liens, judgments or bankruptcies?
- What is its credit utilization?
- Has it maintained valuable lines of trade credit?
If a business checks all the boxes above, it may be one of the best businesses to lend to. So, next time you find yourself on the fence about whether or not to lend to a company, order a business credit report and dig deeper into its finances to help you make the best decision.