Building business credit isn’t just about paying your bills on time. Ideally you want those on-time payments reported to the credit agencies so other vendors and lenders will see your stellar payment history. But if your small business, like many, does business with other smaller firms, it may be difficult to get credit for your good credit. That’s because it’s not always simple to report small numbers of transactions.
Traditionally, if you want to report your customer’s payment histories, you must set up an account with at least one of the business credit reporting agencies, and that in itself is no small task. (I’ve tried.) You’ll go through what can be a lengthy application process, you may have to pay the agency in order to get set up to report, then you have the task of supplying account information each month.
It’s no surprise that most small businesses never bother. That means millions of transactions go unreported.
That’s why I am intrigued by Cortera’s new platform that allows firms to rate others. It debuted a few months ago at Demo – you can watch the video from the conference here. It’s easy, and free, to report.
And don’t worry that this is some new start up that will hot this year, gone the next. Cortera is not a newcomer to the business credit world. They have been around for fifteen years and have developed a robust credit reporting platform used by large firms, too.
For this new community to work, business owners need to give as well as get. That means we need to start reporting our payment experience with our customers, as well as asking our vendors to do the same for us. The more information that is shared, the more valuable the database becomes.
While I’d like to focus on the positive whenever possible, there are additional ways to use this service. For example, you can employ the system as a soft collections tool. Let your clients or customers know you will report their payment history, and see if they don’t start moving your invoices up toward the top of the pile.
Approached by a new business partner, client or customer? Check a basic credit report for free, or pony up a few bucks for a full report. At $3 for an individual report (bulk pricing is also available), it’s cheaper than a latte, and can save you many times more than that if it heads off a bad business deal.
Give it a try and let me know what you think!
Gerri Detweiler’s mission is to provide reliable, unbiased answers to your credit questions. She is the co-author of Business Credit Success: Get on the Financing Fast Track and serves as Personal Finance Advisor for Credit.com.